Mortgage Rates Hit 6.95% as Refinancing Demand Collapses
Refinance applications fell 9% last week as the 30-year fixed rate climbed to 6.95%. Homeowners are shifting to home equity lines of credit to access cash.
The average 30-year fixed mortgage rate rose to 6.95% in the week ending September 17. This level marks the highest point since May 2025. The increase followed a Federal Reserve decision to raise the benchmark rate to a range of 3.75% to 4.00%.
Refinance applications dropped 9% compared to the prior week. Purchase applications declined by 1% during the same period. The share of refinancing in total applications fell to 39.4%.
Equity products replace refinancing
Home equity lines of credit and reverse mortgages captured 76% of recent inquiries. This share was 43% in the same period last year. Refinance inquiries fell to just 2% of the total mix.
Inquiry volume for these products rose 157% year over year in August. Lenders responded by adjusting pricing. FourLeaf Federal Credit Union raised its variable home equity rate by 0.25 points to 7.00%.
Lender spreads widen significantly
The gap between the cheapest and most expensive posted 30-year rates reached 1.26 percentage points. AmeriSave offered the lowest rate at 5.99%. Rocket Mortgage posted the highest at 7.25%.
This spread equals a monthly difference of approximately $333 on a $400,000 loan. Bank of America lowered its 30-year fixed rate by 0.125 points. U.S. Bank raised its FHA 30-year rate by 0.135 points.
Builder confidence hits new low
The NAHB/Wells Fargo Housing Market Index fell three points to 32 in September. This is the lowest reading since September 2025. Builders cited higher material costs and labor shortages as primary drivers.
The 10-year Treasury yield closed at 5.01% on Wednesday. This yield rose 18 basis points over the past week. According to GN auto markets/housing data, mortgage pricing continues to track this benchmark closely.
