U.S. mortgage applications saw a continued decline during the two weeks leading up to December 27, primarily due to rising interest rates that dampened demand, according to data released by the Mortgage Bankers Association (MBA) on Thursday.
The market composite index, an indicator of mortgage loan application volume, fell by a seasonally adjusted 21.9% compared to two weeks prior. On an unadjusted basis, the index saw a reduction of 55%. These figures have been adjusted to account for the Christmas holiday, the MBA noted.
The holiday-adjusted refinance index dropped 36% from two weeks ago, although it was 10% higher than the same period last year. Unadjusted, this measure declined 62% from the previous two weeks and was 6% lower than the same week one year prior.
The seasonally adjusted purchase index experienced a 13% decrease from two weeks ago, paralleled by a 48% drop in the unadjusted figure.
"Mortgage rates increased throughout the final full week of 2024, nearing 7% for 30-year fixed-rate loans," stated Mike Fratantoni, MBA's Senior Vice President and Chief Economist. "This rise in rates occurred just as housing activity typically slows down, leading to a drop in both refinance and purchase applications."
The proportion of applications involving the Federal Housing Administration (FHA) decreased to 16.6% from 17.2% the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $766,550 or less increased to 6.97% from 6.89%.
For 30-year fixed-rate mortgages with jumbo loan balances—exceeding $766,550—the average rate rose to 7.13% from 6.99%.
The average interest rate for 30-year fixed-rate FHA-backed mortgages inched up to 6.69% from 6.68%, while the rate for 15-year fixed-rate mortgages rose to 6.43% from 6.37%.
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