Mortgage Applications Decline As Rates Stay Elevated

Mortgage applications decreased 2% on a seasonally adjusted basis for the week ending January 24, 2025, according to the latest data from the Mortgage Bankers Association (MBA).

The seasonally adjusted purchase index declined 0.4%, while the refinance index plunged 7% from the previous week and 5% from the same week a year ago. The unadjusted purchase index fell 4% from the previous week and 7% from the same week a year ago.

“Mortgage rates were mixed last week, and the 30-year fixed rate remained unchanged at 7.02 percent,” commented Joel Kan, vice president and deputy chief economist for the MBA, on last week’s figures. “Application activity was slightly weaker, primarily because of a 7 percent decline in refinancing across both conventional and government loans.”

The refinance share of mortgage activity decreased to 37.1% of total applications from 40.4% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.8 %.

Mortgage applications have remained subdued since mortgage rates climbed back to 7% — their highest levels since July — through late December. In the meantime, Kan pointed out that FHA purchase loan applications emerged as a bright spot in last week’s numbers, rising 2%.

“New and existing-home sales ended 2024 on a strong note, and if mortgage rates continue to stabilize and for-sale inventory loosens, we expect a gradual pick up in purchase activity in the coming months,” Kan said.

The FHA share of total applications increased to 16.7% from 16.5% the week prior, while the VA share of total applications decreased to 13.2% from 14.6%, and the USDA share of total applications increased to 0.5% from 0.4%.

This week’s tally of applications will include an adjustment for the Martin Luther King holiday.