Mortgage Demand Rises as Borrowers Seek Lower Rates & ARM Options

FHA loans and adjustable-rate mortgages gain popularity amid affordability challenges

Published on Feb. 11, 2026

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The mortgage market is seeing a shift, with overall application volume rising slightly despite steady 30-year fixed rates. Homebuyers are increasingly turning to FHA loans and adjustable-rate mortgages (ARMs) to navigate affordability challenges in the pricey housing market. Refinance activity is also surging, as many homeowners can save 75 basis points or more by refinancing. However, purchase applications have dipped amidst the ongoing market conditions of high prices and limited inventory.

Why it matters

These trends reflect borrowers' efforts to find more affordable options in the current mortgage landscape. The rise of FHA loans and ARMs suggests homebuyers are becoming more flexible in their loan choices to achieve homeownership, while the surge in refinancing indicates many existing homeowners can benefit from lower rates. Understanding these market shifts is crucial for both consumers and industry professionals.

The details

The mortgage application volume saw a slight 0.3% increase, driven not by traditional purchases but by borrowers seeking alternative loan products. Applications for FHA purchase and refinance loans have risen, partially due to the FHA rate being 20 basis points lower than the conforming 30-year fixed rate. The ARM share of total applications also climbed to 8%, a seven-week high, as ARMs offer rates almost a full percentage point lower than fixed rates. Refinance applications increased by 1% for the week and are 101% higher than the same week last year, despite rates being 74 basis points higher than a year ago. However, purchase applications fell 2% for the week, remaining only 4% higher year over year, indicating the ongoing challenges in the housing market.

  • As of last week, the conventional 30-year fixed rate was 6.21%.
  • The ARM share of total applications climbed to 8%, a seven-week high.

The players

Joel Kan

Vice president and deputy chief economist at the Mortgage Bankers Association.

Security Financial Services

A lender based in San Francisco that offers private money loans in Northern California with rates starting at 8.25% and closing times as swift as 3-5 business days.

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What they’re saying

“Borrowers are 'increasingly utilizing FHA loans as affordability challenges remain.'”

— Joel Kan, Vice president and deputy chief economist at the Mortgage Bankers Association

What’s next

The monthly employment report will be closely watched, as a weaker-than-expected number could further drive rates down, while a strong report could cause them to rebound.

The takeaway

The current trends in the mortgage market suggest borrowers are becoming more flexible and willing to explore different loan products, such as FHA loans and ARMs, to achieve their homeownership goals amidst affordability challenges. This shift reflects the ongoing efforts to find more affordable options in the pricey housing market.