Mortgage interest rates spiked toward the end of December, hitting demand for mortgages just as the housing market entered its slowest period in a typical year.
According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume for the two-week period ending Dec. 27, 2024, was down 21.9% compared to the previous week in that period. Additional adjustments have been made to account for the Christmas holiday. MBA released two weeks worth of data after being closed for the holidays.
During this time, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $766,550 or less increased from 6.89% to 6.97%, and points for origination-contingent loans increased from 0.67 to 0.72, including origination fees. 20% down payment. Mortgage rates were lower than a year earlier for much of 2024, but rose 21 basis points each year.
“Mortgage rates rose through the last full week of 2024, reaching nearly 7% for 30-year fixed-rate loans,” said Mike Fratantoni, chief economist at MBA. “Unsurprisingly, this rate increase at a time when housing activity is generally coming to a halt has resulted in a decline in both refinance and purchase applications.”
Applications for refinancing mortgages, which are most sensitive to interest rate fluctuations, fell 36% from two weeks ago. However, it remained at a 10% higher level compared to the same period last year. Refinances as a share of mortgage activity decreased to 39.4% of total applications from 44.3% the previous week.
The number of applications for mortgages to buy homes fell by 13% in two weeks, and by 17% compared to the same period last year. December is typically the slowest month of the year for home sales, but these numbers are seasonally adjusted and year-to-year comparisons show significant weakness. There are more homes on the market now than there were this time last year, but high prices and interest rates have left many of those homes sitting idle for months.
Mortgage rates started this week above 7% for a 30-year fixed, according to a separate Mortgage News Daily survey. There’s a lot of variation in all of these numbers considering the holidays are mid-week this year.
“There’s no way to know where the bond market will open on Thursday,” said Matthew Graham, chief operating officer of Mortgage News Daily. “The last or first trading day of a given year may see excessive volatility or momentum for reasons that have nothing to do with normal motivations (economic data, news, policy changes). .”
