Mortgage volumes see first back-to-back fall in 2 months

Home loan applications fell in consecutive weeks for the first time in two months, according to the Mortgage Bankers Association.

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The MBA’s Market Composite Index, a measure of mortgage loan application volume, dropped 5% on a seasonally-adjusted basis from one week prior for the period ending Dec. 19. The move comes after it sank 3.8% the week ending Dec. 12. 

On an unadjusted basis, the index fell 6% from the prior survey.

“Overall mortgage application volume fell last week, despite the slight decline in mortgage rates,” said Mike Fratantoni, MBA’s senior vice president and chief economist, in a press release Wednesday. 

“MBA expects the trends of a softening job market, sticky inflation, elevated home inventories and steady mortgage rates will persist into the new year.”

The 30-year fixed-rate mortgage has remained relatively stable over the past two months, starting November at 6.22% and currently sitting at 6.18%, according to Freddie Mac.

The Refinance Index also decreased significantly, declining 6% from seven days earlier but still resting 111% higher than the same week a year ago. The Purchase index fell 4% on a seasonally-adjusted basis and 6% on an unadjusted basis compared with the previous week. 

“Purchase application volume last week was 16% higher than a year earlier,” Fratantoni said. “We are forecasting continued, modest growth in terms of home sales in 2026.”

New-home purchase activity increased 3.1% in November compared to the same period in 2024, the largest year-over-year rise since July, the MBA reported. 

But a drop in overall purchases last week slightly bumped the refinance share of total applications to 59.1% from 59% in the previous survey. The adjustable-rate mortgage share of activity climbed to 8.1% from 7.2%.

The share of loans insured by the Federal Housing Administration relative to total applications increased to 20.8% from 19.5% the week prior. But loans backed by the Department of Veterans Affairs saw their portion fall to 15.3% from 16.6%, while U.S. Department of Agriculture-supported loans’ share remained unchanged at 0.4%. 

Three of the five types of mortgages the MBA tracks saw an increase in interest rates last week compared with the week prior, including:

• 30-year fixed-rate mortgages with jumbo loan balances, 6.52% from 6.44%
• 30-year fixed-rate mortgages backed by the FHA, 6.14% from 6.12%;
• Five-year ARMs, 5.79% from 5.63%.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances dropped to 6.31% from 6.38%, while 15-year fixed-rate mortgages slightly declined to 5.70% from 5.72%.