The average 30-year fixed mortgage rate climbed to 6.85 percent last week, the highest reading since June 2025, and refinancing fell to its slowest weekly pace in 16 months, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey released Wednesday. Total application volume fell 2.7 percent from the week before.
The figures cover the week ending Sept. 4 and mark the second consecutive weekly decline. They also show borrowers reacting to higher fixed rates by moving toward adjustable-rate loans in numbers not seen since early summer.
What the MBA survey shows
The Market Composite Index, the association’s measure of application volume, fell 2.7 percent on a seasonally adjusted basis and 4 percent unadjusted.
Refinancing took the harder hit. The Refinance Index dropped 6 percent from the prior week and was 25 percent below the same week a year ago. The refinance share of all applications slipped to 40.9 percent from 41.8 percent.
Purchase demand was close to flat. The seasonally adjusted Purchase Index eased 0.2 percent, and the unadjusted index fell 3 percent for the week while running 4 percent above year-ago levels. That year-over-year gain is the one steady line in the data: buyers are still transacting at a slightly better clip than last September, even as financing costs rise.
“Mortgage rates moved higher last week, driven by ongoing investor concerns over inflation and the federal budget deficit,” said Joel Kan, the MBA’s vice president and deputy chief economist. “The 30-year fixed rate increased to 6.85%, the highest since June 2025 and 36 basis points higher than a year ago.”
Kan added that refinance applications “remain significantly impacted by these higher rates, falling to the slowest weekly pace since May 2025,” and that “purchase applications overall were little changed from last week, but more borrowers have shifted to using ARM loans, with the ARM share of applications at 8.5%, the highest share since June.”
“Higher mortgage rates continue to weigh on prospective homebuyers looking to act, even as housing inventory has increased in many markets,” he said.
Rates by loan type
The average contract rate for 30-year fixed loans with conforming balances of $832,750 or less rose to 6.85 percent from 6.79 percent, with points increasing to 0.67 from 0.65 for loans at 80 percent loan-to-value. Points are the upfront fees a borrower pays to secure a quoted rate, expressed as a percentage of the loan.
Jumbo loans moved the other way. The 30-year fixed jumbo rate, for balances above $832,750, eased to 6.74 percent from 6.76 percent, though points jumped to 0.63 from 0.40, and the effective rate still rose.
FHA-backed 30-year loans averaged 6.53 percent, up from 6.49 percent. The 15-year fixed rate rose to 6.17 percent from 6.14 percent.
The outlier was the 5/1 adjustable-rate mortgage, which fell to 5.82 percent from 5.94 percent, the only category where the effective rate declined.
Loan-type shares shifted with the rates. FHA rose to 17.2 percent of applications from 15.9 percent, VA fell to 12.0 percent from 13.6 percent, and USDA held at 0.5 percent.
What it means
The verified facts are the survey readings: a 6.85 percent conforming rate, a 2.7 percent drop in total applications, refinancing at a 16-month low and an 8.5 percent ARM share. Kan’s attribution of the move to inflation and deficit concerns is the MBA’s interpretation, not an established cause.
As RealtyWire analysis, the most useful number in this release is the spread between the fixed and adjustable products. With the 30-year fixed at 6.85 percent and the 5/1 ARM at 5.82 percent, a borrower now saves more than a full percentage point at the start by accepting future rate risk. That gap, not sentiment, is the mechanical explanation for the rising ARM share, and it tends to widen when investors push long-term yields up faster than short-term ones.
The payment arithmetic on the fixed side stays modest week to week and meaningful year over year. On a $350,000 30-year loan, principal and interest runs about $2,293 a month at 6.85 percent, roughly $14 more than at last week’s 6.79 percent. Against the 6.49 percent implied by Kan’s 36-basis-point year-over-year figure, it is about $83 more a month, or roughly $1,000 a year.
Last week’s survey had shown applications rising 0.8 percent even as the rate climbed to 6.79 percent, and Freddie Mac’s separate weekly survey put its 30-year average at a 13-month high of 6.71 percent on Sept. 3. The two surveys use different methods and are not directly comparable, but both point the same direction.
Worth watching: Freddie Mac publishes its next rate survey Thursday, and the Federal Reserve’s rate-setting committee meets Sept. 15-16 according to the central bank’s published calendar. If long-term yields hold at current levels, the refinance pool has little room left to shrink, which would leave purchase volume carrying the market. More coverage is on the Mortgage page.
The MBA survey has run weekly since 1990 and covers closed-end residential mortgage applications through retail and consumer-direct channels, with respondents including mortgage bankers, commercial banks, thrifts and credit unions.
