Homebuyers Shift to Riskier Mortgages as Interest Rates Rise

Mortgage applications dipped this past week as rising interest rates and persistent market pressures kept some buyers out of the market and pushed others toward riskier loan structures.For the week ending Sept. 4, the Mortgage Bankers Association's Market Composite Index—a measure of total mortgage loan application volume—fell 2.7% on a seasonally adjusted basis from the previous week.“Higher mortgage rates continue to weigh on prospective homebuyers looking to act, even as housing inventory has increased in many markets,” said Joel Kan, MBA’s vice president and deputy chief economistMeanwhile, the Purchase Index, a leading indicator for home sales, decreased 0.2% week over week on a seasonally adjusted basis, and was down 4% from a year earlier. Refinance activity fell 6% week over week and was down 25% year over year.The mortgage application slowdown corresponds with rising interest rates. This week, MBA says 30-year fixed rate hit 6.85%, up from 6.79%, the highest since June 2025 and 36 basis points higher than a year ago. Thirty-year jumbo loans have climbed to 7.08%, the highest they've been since July 2024.These rates have pushed a growing number of buyers toward riskier adju...