Borrowers who applied for a home loan in the week ending Sept. 18 faced the steepest rates in more than two years, and fewer of them applied. The Mortgage Bankers Association reported on Sept. 23 that its seasonally adjusted market composite index slipped 1.5% from the week before, while the average contract rate on a 30-year fixed conforming loan rose to 7.12% from 6.97%.
A 15-basis-point move and what it does to a payment
The MBA’s weekly applications survey put the 30-year conforming rate at 7.12%, with 0.73 points. Mike Fratantoni, the MBA’s senior vice president and chief economist, said mortgage rates “vaulted higher last week” and called 7.12% the highest level since May 2024. The 30-year jumbo rate moved to 7.15% from 7.03%, the FHA rate to 6.78% from 6.62%, and the 15-year fixed rate to 6.43% from 6.30%.
A Financial Wire calculation on a $300,000 loan, counting principal and interest only, shows what the week’s 15 basis points cost. At 6.97% the monthly payment is about $1,990. At 7.12% it is about $2,020, roughly $30 more every month for the life of the loan. Taxes, insurance and any mortgage insurance would come on top of both figures.
Why adjustable loans took a bigger slice
The clearest behavioral signal in the survey came from the loan types borrowers chose rather than from the headline index. Fratantoni said that “with fixed rates much higher, more borrowers opted for ARMs, with the ARM share reaching 9.8%.” The MBA data showed the average 5/1 adjustable rate at 6.10%, down from 6.23% a week earlier, even as the fixed rate climbed. That leaves a gap of about a full percentage point between the two products.
On the same $300,000 principal-and-interest basis, the adjustable rate works out to roughly $1,820 a month, about $200 less than the fixed payment. The saving applies only to the initial fixed period of an adjustable loan, after which the rate resets to a level the borrower cannot know in advance. For buyers on a fixed retirement income, that reset is the number the survey cannot supply.
What the applications count did and did not show
The 1.5% decline is the seasonally adjusted figure. On an unadjusted basis the MBA’s composite index rose 9% for the week, so the adjusted decline reflects the survey’s seasonal factors rather than a drop in raw applications. The purchase index slipped 1% on an adjusted basis and stood 11% below the same week a year earlier on an unadjusted basis.
The mix of government-backed loans moved little. FHA loans made up 16.7% of applications, down from 16.9%, VA loans 12%, down from 12.4%, and USDA loans 0.6%, up from 0.4%. The FHA rate of 6.78% remained below the conforming rate by 34 basis points, and the FHA loan carried 0.96 points against 0.73 for the conforming loan.
Two weekly rate series pointing the same way
The MBA’s figure is not the only measure. Freddie Mac’s Primary Mortgage Market Survey, whose latest report is dated Sept. 24, put the average 30-year fixed rate at 7.03%, up from 6.95% the prior week and 6.30% a year earlier. Its 15-year average was 6.42%. Freddie Mac’s economists said the housing market “remains supported by a solid labor market and an economy that is growing at a healthy rate.”
The two series differ by nine basis points, 7.12% against 7.03%, and cover different periods, the MBA’s ending Sept. 18 and Freddie Mac’s report dated Sept. 24. Both rose from the prior week. Freddie Mac’s 30-year figure was 73 basis points above its reading of a year earlier.
A rate hike sitting underneath the mortgage market
The move followed the Federal Reserve’s Sept. 16 decision. In its FOMC statement, the Fed voted 12-0 to raise the target range for the federal funds rate by a quarter point, to 3-3/4 to 4 percent, and said inflation “remains elevated.” Mortgage rates do not track the federal funds rate one for one, but the Sept. 16 decision fell inside the survey week that ended Sept. 18.
The MBA said in a separate chart of the week published Sept. 25 that rates have stayed above 6.5% every week since May 2026 and that home purchase applications have declined as rates climbed, now lagging early 2026 levels.
How far forecasts sit from the survey
Forecasters had penciled in lower numbers. Fannie Mae’s Economic and Strategic Research Group, in its Sept. 11 forecast, projected the 30-year rate averaging 6.5% in 2026 and 6.7% in 2027, with total home sales of 4.692 million this year, down from 4.754 million in 2025. The group’s forecast for home price growth slows to 1.0% in 2027 from 2.3% in 2026. The MBA’s 7.12% reading sits 0.62 percentage point above that 2026 average.
The Sept. 23 release is the latest weekly survey the association has published as of Sept. 29, and Fratantoni’s account of it, that fixed rates were “much higher” and borrowers were leaning toward ARMs, is the MBA’s own reading of the week.
Holding down the tax side of a housing budget
Higher mortgage rates raise the cost of a new loan, but the property-tax line of a homeowner’s budget can sometimes be trimmed through relief programs that must be requested. Senior freezes, homestead exemptions and circuit-breaker credits typically require an application and periodic renewal.
The Senior Property Tax & Home-Cost Relief Kit covers the 5 kinds of property-tax relief and the circuit-breaker credit that includes renters, with an application log for each filing.
Compare the five kinds of property-tax relief side by side →
This article was produced with AI assistance and checked against the primary sources linked above.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
