Mortgage applications took their annual slide at the end of the year, dipping a seasonally adjusted 9.7% over the two-week punchbowl ending Jan. 2.
The latest figures from the Mortgage Bankers Association (MBA) show its Market Composite Index, a measure of mortgage loan application volume, fell 28% on an unadjusted basis, with seasonally adjusted purchase activity down 6% from the two weeks prior.
The unadjusted purchase component index was 10% higher than the same week a year ago. The refinance share of overall activity rose to 56.6% from 53.8% in the previous weeks.
The holiday-adjusted refinance index fell 14% from two weeks ago while remaining 133% higher than a year ago. The unadjusted refinance index dropped 31% from two weeks ago and was 108% higher than a year ago, the MBA reported.
Joel Kan, deputy chief economist at the MBA, said in a press release that the association “continues to expect mortgage rates to stay around current levels, with spells of refinance opportunities in the weeks when rates move lower.”
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances fell to 6.25% from 6.32% two weeks earlier, while average rates for a 30-year fixed-rate loan insured by the Federal Housing Administration (FHA) dropped to 6.09% from 6.15% two weeks ago.
Kan drew attention to the elevated purchase activity, relative to the same time last year, while noting weekly declines in conventional and FHA purchase applications despite 30-year mortgage rates beginning the year at their lowest levels since September 2024, according to MBA data.
“The average loan size was $408,700, the smallest in a year, driven by lower average loan sizes across both conventional and government loan types,” he said.
Among all applications, however, prospective government borrowers gained ground, with FHA share rising to 20% from 18.4% over the two-week period and the share of applications for loans backed by the Department of Veterans Affairs rising to 17.3% from 16.3%.
The adjustable-rate mortgage share of activity decreased to 6.3% of total applications for the two weeks ending Jan. 2.
