See how higher rates are changing the lending landscape
The Mortgage Bankers Association's MBA Weekly Mortgage Applications Survey reported, for the week of December 27, 2024, a year-over-year fall of 21.9% in mortgage applications.
The result is adjusted to account for Christmas, and it registered significant changes for multiple lending categories.
The Market Composite Index, which measures mortgage loan application volume, was down 21.9% on a seasonally adjusted basis from two weeks earlier. On an unadjusted basis, it fell 55%. The Purchase Index dropped 13% on a seasonally adjusted basis and 48% on an unadjusted basis, dropping 17% compared with the same week in 2023.
“Mortgage rates moved higher through the last full week of 2024, reaching almost 7% for 30-year fixed-rate loans,” MBA’s SVP and chief economist Mike Fratantoni shared.
Fratantoni noted that this increase in rates resulted in both refinance and purchase applications which does not come as a surprise at a time when housing activity typically halts.
The refinance sector demonstrated particularly notable changes, with the refinance index decreasing 36% from two weeks prior, though remaining 10% above the same week last year.
Meanwhile, refinance activity's share of total applications dropped to 39.4% from 44.3%. The adjustable-rate mortgage (ARM) share decreased to 5.2% of total applications.
On the other hand, government loan programs showed mixed results, with FHA shares decreasing to 16.6% from 17.2%, while VA shares increased to 15.7% from 15.2%. The USDA share experienced a slight decrease to 0.4% from 0.5%.
Interest rates across various mortgage categories showed upward movement. The 30-year fixed-rate mortgages with conforming loan balances reached 6.97%, up from 6.89%, with points increasing to 0.72. Jumbo loan balances saw rates rise to 7.13% from 6.99%, with points increasing to 0.64.
The survey, conducted weekly since 1990, focuses on US residential mortgage applications through retail and consumer direct channels, which include mortgage bankers, commercial banks, thrifts, and credit unions. The data is a leading indicator of mortgage financing activity across the country.
Do you think this is caused by a holiday lull or indicates a deeper trend? Let us know in the comments.
