As the 30-year fixed mortgage rate increased for the sixth consecutive week to 7.70%, mortgage applications slumped, hitting their lowest level since 1995.

Last Monday, in an attempt to calm the markets, a coalition of housing trade groups — including the Mortgage Bankers Association (MBA), National Association of Realtors (NAR) and National Association of Home Builders (NAHB) demanded that the Federal Reserve to provide clarity on the Fed’s rate path and its plans for the mortgage-backed securities (MBS) portfolio.

Mortgage applications decreased 6.9% for the week ending Oct. 13, compared to the week prior, according to weekly mortgage application data from the MBA.

“Both purchase and refinance applications declined driven by larger drops for conventional applications,” Joel Kan, MBA’s vice president and deputy chief economist, detailed. “Purchase applications were 21% lower than the same week last year, as homebuying activity continues to pull back given reduced purchasing power from higher rates and the ongoing lack of available inventory.”

Meanwhile, the ARM share was 9.3%, 0.1 basis point higher than last week and the highest share in 11 months. Some borrowers are turning to ARMs in the hope of lowering their monthly payments. Additionally, refinance activity was at its lowest level since early 2023, with its share decreasing to 30.5% of total applications, down from 31.6% the previous week.

“There is very limited refinance incentive with mortgage rates at multi-decade highs,” Kan said.

The share of Federal Housing Administration (FHA) loan activity inched up to 14.8% from 14.4% for the week ending Oct. 13. The share of Department of Veterans Affairs (VA) loan activity was 10.7%, up from 10.2% the week prior while the share of Department of Agriculture (USDA) loan activity held steady at 0.5%.