Share of Adjustable Rate Mortgages Hits Highest Level Since September 2025

Mortgage rates ticked down a bit this past week but landing at 7.3%, it wasn’t enough to move the needle for buyers submitting loan applications for 30-year-fixed rate mortgages. Sitting almost a full percentage point lower, adjustable rate mortgages (ARMs) however continue to be attractive for buyers looking to start out with a lower monthly payment.

The latest Market Composite Index from the Mortgage Bankers Association (MBA)—its measure of mortgage loan activity volume and includes purchases and refinances—shows mortgage application activity decreasing 1.2% on a seasonally adjusted basis after last week’s 3.4% increase. On an unadjusted basis, the Index decreased 2% compared with the previous week.

This week’s decline follows weeks of fluctuations as the 30-year fixed mortgage rate still lingers around 7.29%, according to Freddie Mac and this week currently sits at 7.25%, according to Mortgage News Daily. Freddie Mac’s next rate report will be released Thursday.

“Mortgage rates drifted down to their lowest level since September 2026 last week in the wake of the Federal Reserve’s decision to hold on additional rate hikes at its October meeting,” said Mike Fratantoni, MBA’s SVP and chief economist. “While the 30-year rate declined to 7.3 percent, activity is still quite slow, with purchase application volume down for the week and refinance volume effectively flat at a very low level.”

MBA once again pointed to increased activity in the ARM share of total mortgage applications as a sign that buyers are ready to move on lower rates. According to the report, the average contract interest rate for 5/1 ARMs decreased to 6.29% from 6.41%, with points decreasing to 1.00 from 1.20 (including the origination fee) for 80 percent LTV loans. The adjustable-rate mortgage (ARM) share of activity increased to 11.4 percent of total applications, MBA reported.

“As we have highlighted in recent weeks, more borrowers are choosing ARMs in this environment to lower their initial payments, with the ARM share at its highest level since September 2025,” Fratantoni said.

An ARM loan is where the interest rate is fixed for an initial period, typically five years, and then changes annually for the life of the loan, based on market conditions.

MBA’s Refinance Index increased 0.1% from the previous week and was 60% lower than the same week one year ago. MBA’s seasonally adjusted Purchase Index–its weekly measurement of nationwide home loan applications based on a sample of about 75% of U.S. mortgage activity–decreased 2% from one week earlier. The unadjusted Purchase Index decreased 4% compared with the previous week and was 19% lower than the same week one year ago, according to the report.

The refinance share of mortgage activity saw an increase this week–to 39.8% from 38.9% the previous week, MBA reported.

A look at government-backed loans this week shows the FHA share of total applications decreased to 16.0% from 16.6% the week prior. The VA share of total applications increased to 11.2% from 11.0% the week prior, and the USDA share of total applications increased to 0.6% from 0.5% the week prior.

To view the full report, click here.