Mortgage rates finally paused their seven-week upward march, holding steady at last week’s three-year high, according to the Freddie Mac Primary Mortgage Market Survey as of October 15th. This brings welcome breathing room to a stalled housing market, though borrowing costs remain over a full percentage point higher than a year ago. This leveling off marks a critical psychological consolidation phase for the market.
Mortgage applications decreased 2.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending October 9th. “Mortgage applications decreased as rates moved higher last week. The 30-year fixed rate was the highest since November 2023 and more than a percentage point higher than a year ago,” said Joel Kan, CMB, MBA’s Vice President and Deputy Chief Economist. “As a result, borrowers continue to rely more on ARM loans to help lower their monthly payments. The ARM share at 10.5 percent was at its highest level since October 2025. Last week’s decrease in refinances was mainly driven by a 5 percent drop in FHA refinance applications.”
September brought little relief to the accelerating cost of living, as consumer prices increased again and kept the inflation rate well above the Federal Reserve’s goal. The Consumer Price Index, a broad measure of goods and services costs across the U.S. economy, rose a seasonally adjusted 0.6% for the month, putting the 12-month rate at 3.7%, the Bureau of Labor Statistics reported Wednesday. Stripping out volatile food and energy costs, the so-called core CPI rose 0.3% for the month and was up 2.6% on an annual basis. Surging energy costs were again the primary culprit in the inflation picture. The energy index jumped 5.2% as tensions continued between the U.S. and Iran in a war launched in late February that shows no signs of ending anytime soon.
Consumer sentiment fell to a five-month low in October. The preliminary October reading for the University of Michigan Consumer Sentiment Index came in at 46.3. This is a 1.8-point (3.7%) decrease from September and is 13.6% below where it was a year ago. Joanne Hsu, the director of surveys, made the following comments: “While year-ahead expectations for personal finances and business conditions crept up slightly, buying conditions for durables plummeted amid high prices and borrowing costs. Frustration over cost-of-living continues to mount, as consumers across the political spectrum believe that the trajectory of the economy has weakened since the beginning of the year.
