Mortgage rates eased to 7.24%, but purchase applications trail last year by 18%

The average 30-year mortgage rate fell for a third straight week to 7.24%, Freddie Mac said on October 29 ^[1]. It had reached 7.40% in the weeks of October 8 and October 15, up from 6.66% at the end of August ^[2][3][6].

Sam Khater, Freddie Mac’s chief economist, said the latest reading was the lowest of the month and was “modestly boosting purchasing power” ^[1]. On a $400,000 loan, we calculate principal and interest at about $2,726 a month at 7.24%, about $284 more than at the 6.17% rate of a year ago.

Purchase applications remain well below last year’s pace

The Mortgage Bankers Association’s purchase index rose 4% in the week ending October 23, after a 7% drop the week before ^[4][5]. In both weeks the unadjusted index was 18% below the same week a year earlier ^[4][5].

Joel Kan of the MBA said the week before that the higher rate environment “has cooled the housing market this fall” ^[5]. Refinance applications were 61% below a year earlier and made up 38.9% of all applications ^[4].

Borrowers are shifting toward adjustable-rate loans

ARMs made up 11.3% of applications in the week ending October 23, which MBA said was the highest share in over a year ^[4]. The 5/1 ARM averaged 6.41%, against 7.37% for a 30-year conforming loan ^[4].

How to use this

For homebuyers

1. Get at least three written loan estimates on the same day, because Freddie Mac said in October that getting multiple quotes “can potentially save them thousands” ^[2]. Compare the rate and the points on each, since MBA’s FHA quote carried 1.07 points against 0.76 on a conforming loan ^[4].
2. Ask each lender to price a 5/1 ARM next to the 30-year fixed. We calculate that on a $400,000 loan the ARM’s average 6.41% rate means about $2,505 a month for the first five years, roughly $257 less than the 7.37% fixed rate ^[4]. Ask in writing what the rate cap is at the first reset.
3. Lock only after you have an accepted offer and a closing date, and get the lock period in writing. Rates moved from 7.40% to 7.24% in three weeks ^[1][2], so a lock with a float-down option has real value in a market moving this fast.

For sellers and builders

1. Price a rate buydown against a price cut before you list. With purchase applications 18% below a year ago ^[4], fewer buyers are shopping, and showing them a lower payment can matter more than a lower price.
2. Ask your listing agent how many showings came from buyers who were preapproved before September. A buyer approved at the 6.71% rate of early September ^[6] faces a payment about $142 a month higher at 7.24% on a $400,000 loan, we calculate.

For lenders and investors

1. Plan for refinance volume to stay low while rates sit above last year’s. The refinance index was 61% below a year ago ^[4], and loans made at 2025’s 6.17% to 6.50% rates ^[1][6] would not save money at today’s average.
2. Track the ARM share each week. It rose to 11.3% from 10.5% in one week ^[4][5], and a rising share can point to buyers who need a lower starting payment to qualify.