Interest Rates Rise, But Mortgage Applications Increase Anyway

Mortgage Weekly Update

Interest rates rose this week, hitting an average 3.14% on 30-year, fixed-rate loans. That’s up from 3.09% last week and 2.81% a year ago, according to Freddie Mac.

Despite the uptick, overall mortgage applications also increased, rising a slight 0.3% over the week prior. Purchase loan activity was up 4% for the week, while refinances were actually down 2%.

“The increase in rates triggered the fifth straight decrease in refinance activity to the slowest weekly pace since January 2020,” said Joel Kan, the associate vice president of economic and industry forecasting for the Mortgage Bankers Association. “Higher rates continue to reduce borrowers’ incentive to refinance.”

In addition to the jump in purchase loans, the average loan size rose, hitting its highest point in three weeks. The rise is largely due increasing home prices, as well as a dropoff in first-time homebuyer activity, according to Kan. 

“Both new and existing-home sales last month were at their strongest sales pace since early 2021, but first-time homebuyers are accounting for a declining share of activity,” Kan said. “Home prices are still growing at a rapid clip, even if monthly growth rates are showing signs of moderation, and this is constraining sales in many markets and particularly for first-timers.”

More in mortgage & housing news

  • The share of mortgage loans in forbearance has now dropped to 2.21% of all loans, according to MBA. That’s down from 2.28% last week and amounts to about 1.1 million homeowners nationwide.
  • The Federal Housing Finance Agency released its latest House Price Index. According to the data, national home prices jumped 18.5% between August 2020 and August 2021. They were also up 1% from July, with the biggest jumps in the Mountain and West North Central Census divisions.
  • Bidding wars have officially hit a 2021 low, according to Redfin. In September, just 59% of home offers faced competition — down from 60.8% in August and the smallest share seen all year.
  • New home sales increased 14% in September, according to At the same time, prices on new construction hit a new high, clocking in at $408,800 — an 18.7% increase over the year.

This week in mortgage interest rates

Interest rates rose on all mortgage products this week, according to Freddie Mac.

Here’s how rates looked for each loan type:

Make sure to check back here next week for the latest mortgage interest rates and news.

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By Aly Yale / October 28th, 2021 / Categories: / Tags:

Aly Yale

Aly J. Yale is a freelance writer focusing on real estate, mortgage, and the housing market. Her work has been featured in Forbes, Bankrate, The Motley Fool, Business Insider, The Balance, and more. Prior to freelancing, she served as an editor and reporter for The Dallas Morning News. She graduated from Texas Christian University's Bob Schieffer College of Communication with a major in radio-TV-film and news-editorial journalism. Connect with her at or on Twitter at @AlyJwriter.