The average 30-year fixed mortgage rate climbed to 6.85% last week, from 6.79% the week before, the Mortgage Bankers Association said. That is the highest reading since June 2025 and 36 basis points above where it stood a year ago, according to Joel Kan, the MBA’s vice president and deputy chief economist.
The bottom line: borrowers are flinching, and many are looking at adjustable loans.
Why rates rose
Kan told CNBC that investors remained worried about inflation and the federal budget deficit. “Mortgage rates moved higher last week,” he said. The 6.85% figure covers conforming loans of $832,750 or less with a 20% down payment. Average points ticked up to 0.67 from 0.65, origination fee included.
Demand slips, ARMs gain
By the numbers, total mortgage applications fell 2.7% on the MBA’s seasonally adjusted index. Refinancing took the worst of it. Refinance applications dropped 6% for the week and ran 25% below the same week last year, the slowest pace since May 2025.
Purchase applications held up better, slipping just 0.2% and staying 4% above last year’s level. Kan said higher rates still weigh on would-be buyers, even with housing inventory up in many markets.
Adjustable-rate mortgages picked up the slack. They made up 8.5% of applications, against 8% the week before, the highest share since June. The pull is easy to see. The average 5-year ARM rate fell to 5.82% from 5.94%, well under the 6.85% on a 30-year fixed. Some ARMs hold their starting rate for as long as 10 years. The trade-off is risk: payments can rise after the fixed period ends if rates go up. During the first years of the pandemic, when rates sat at record lows, ARMs were only about 3% of applications.
What comes next
A separate survey from Mortgage News Daily showed rates unchanged at the start of this week. Investors were waiting on the latest monthly inflation data, due later in the week. A hotter or cooler reading could move mortgage rates sharply either way.
