Despite a market slowdown, one loan type shows a surprising uptick
Mortgage applications decreased by 2.0% in the week ending January 24, 2025, according to the latest data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. The results, which account for the Martin Luther King holiday, reflect a slight decline in application activity across both refinancing and home purchases.
The Market Composite Index, a key measure of mortgage loan application volume, saw a 2.0% decrease on a seasonally adjusted basis from the previous week. On an unadjusted basis, the Index dropped by 9% week-over-week. The Refinance Index, in particular, experienced a 7% decline, although it was still 5% higher than the same week one year ago. The seasonally adjusted Purchase Index fell by 0.4%, while the unadjusted Purchase Index was down 4% from the previous week and 7% lower than the same week in 2024.
MBA’s vice president and deputy chief economist, Joel Kan, noted that mortgage rates remained mixed during the week, with the 30-year fixed-rate mortgage unchanged at 7.02%. Kan observed that refinancing activity was notably weaker, contributing to the overall decline. “Application activity was slightly weaker, primarily because of a 7% decline in refinancing across both conventional and government loans,” he explained.
Despite this downturn, there were some “bright” spots in the data, Kan noted. FHA-backed purchase loans saw a modest increase of 2%, signaling potential resilience in that segment. Kan also noted that home sales ended 2024 on a positive note, and with the stabilization of mortgage rates and easing inventory, a gradual recovery in purchase activity is expected over the coming months.
Refinance share decreases
Refinancing accounted for 37.1% of all mortgage applications, a decrease from 40.4% the previous week. Meanwhile, the share of adjustable-rate mortgages (ARMs) rose to 5.8% of total applications, up from 5.5% the prior week.
In terms of government-backed loans, the FHA share of applications increased slightly to 16.7%, up from 16.5% the previous week. However, the VA share declined to 13.2% from 14.6%, and the USDA share edged up to 0.5% from 0.4%.
Mortgage rates varied across different loan types. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances remained steady at 7.02%, with points rising slightly to 0.63 from 0.62. For jumbo loans, the average interest rate increased to 7.02% from 6.98%, while the effective rate also saw an uptick. The average rate for 30-year fixed FHA loans dipped slightly to 6.72%, down from 6.74%.
Meanwhile, the 15-year fixed-rate mortgage rate decreased to 6.37% from 6.45%, while the rate for 5/1 ARMs rose slightly to 6.44% from 6.41%.
The MBA’s weekly survey is a gauge of mortgage market activity, covering applications for closed-end residential mortgages.
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