Homebuyers Shift to ARMs and Incentives as 30-Year Mortgage Rate Tops 7.03%

3 articles · Updated · National Association of REALTORS® · Sep 24

Freddie Mac’s 30-year fixed mortgage rate averaged 7.03% on Sept. 24—the first weekly reading above 7% since January 2025—pushing some buyers to smaller homes, cheaper markets or out of the fall market.
ARM demand rose to nearly 10% of mortgage applications last week as fixed rates climbed above 7%, with 5/1 ARMs running more than 1 percentage point below fixed loans and Mortgage News Daily showing 7.26% fixed versus 6.76% for a 7/6 SOFR ARM.
Builders are also absorbing some of the rate shock: 66% used sales incentives in September, more than a third cut prices, and the average price reduction held at 6%.
Lennar and D.R. Horton are leaning on buydowns and promotional financing, including rates at least 1 point below market and, in some cases, permanent reductions for the life of the loan.
Shopping lenders can still materially lower costs: LendingTree found borrowers getting the best rates averaged a 5.52% APR versus 6.15% for others, saving about $121 a month on a $300,000 mortgage.