ARM demand hits 8.5% as fixed rates peak at 6.85%
Adjustable-rate mortgage applications climbed to 8.5% of total volume last week. This shift occurred as the 30-year fixed rate reached 6.85%, its highest level in 14 months.
Borrowers are swapping fixed-rate loans for adjustable-rate options. The 30-year fixed mortgage rate rose to 6.85% last week. This figure marks a 14-month high. Demand for ARMs reached 8.5% of all applications. This is the highest share since June 2025.
Rate spread drives borrower shift
The average 5-year ARM rate fell to 5.82%. This was down from 5.94% the previous week. The 30-year fixed rate climbed to 6.85% from 6.79%. The cost gap is the primary driver of this behavior. Points on conforming loans rose to 0.67 from 0.65.
Application volume declines across sectors
Total mortgage applications dropped 2.7% on a seasonally adjusted basis. Refinance applications fell 6% for the week. They are now 25% below year-ago levels. Purchase applications dipped slightly by 0.2%. They remain 4% above levels from the same period last year.
Inflation concerns pressure the market
Investor anxiety over inflation and the federal budget deficit is pushing rates higher. The 30-year rate is 36 basis points above its level a year ago. Data from GN auto markets/bonds indicates continued volatility. Traders await monthly inflation figures to gauge the next move.
