Franklin, Tenn. — October 5, 2026

Refinance activity has dropped sharply as higher borrowing costs close the window that drew many homeowners back to lenders earlier this year, according to the Mortgage Bankers Association's most recent Weekly Mortgage Applications Survey.

The association's Refinance Index fell 9% in the week ending Sept. 25 and was 56% lower than the same week a year earlier, the MBA reported Sept. 30. Total application volume fell 6% on a seasonally adjusted basis, and the MBA said both purchase and refinance applications had slowed to their weakest weekly pace since 2025.

Joel Kan, the association's vice president and deputy chief economist, attributed the pullback to the recent rise in borrowing costs. The MBA's average contract rate on a 30-year fixed conforming loan rose for a sixth straight week to 7.3%, its highest level since November 2023. "Mortgage rates jumped to their highest level in almost three years, pushing borrowers to the sidelines," Kan said.

Government-backed refinances fell especially hard. Kan said government refinance applications declined 13% for the week, with both FHA and VA applications posting double-digit drops. Refinancings made up 38.3% of all applications, down from 39.3% the week before.

One segment moved the other way. Adjustable-rate mortgages accounted for 10.3% of applications, their highest share since October 2025, according to the MBA data as reported by Mortgage News Daily. Kan said ARM rates were running roughly 80 basis points below fixed rates, though the average 5/1 ARM rate also rose during the week. An adjustable-rate loan typically carries a fixed rate for an initial period, often five, seven or ten years, before resetting at set intervals based on a market index plus a margin, with the size of each adjustment limited by caps written into the note.

For homeowners who already hold a low fixed rate, the latest figures point to a market where refinancing to lower a rate makes sense for fewer borrowers. Refinancing generally remains tied to specific goals that don't depend on beating an existing rate, such as removing a co-borrower after a divorce, converting an adjustable loan before it resets, or changing a loan's term. Whether any refinance pencils out depends on closing costs, how long the borrower expects to keep the loan and the terms of the existing mortgage.

The MBA's next weekly survey is scheduled for release Wednesday, Oct. 7.

Sources