Mortgage demand was negatively impacted by a steep increase in mortgage interest rates around the end of December, which coincided with the housing market’s usual weakest period of the year.
The Mortgage Bankers Association’s seasonally adjusted index shows that the total number of mortgage applications for the two weeks ending December 27, 2024, decreased 21.9% from the week prior. The Christmas holiday was taken into consideration with an additional adjustment. After being closed for the holiday, the MBA provided data for two weeks.
During that time, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $766,550 or less increased to 6.97% from 6.89%, with points rising to 0.72 from 0.67, including the origination fee, for loans with a 20% down payment. For the majority of 2024, mortgage rates were lower than they were the year before, but they increased by 21 basis points annually.
In the final week of 2024, mortgage rates increased to about 7% for 30-year fixed-rate loans, according to Mike Fratantoni, MBA chief economist. Not unexpectedly, both refinance and buy applications decreased as a result of this rate hike during a period when housing activity usually comes to a standstill.
Refinance applications for house loans, which are particularly vulnerable to fluctuations in interest rates, decreased 36% from the previous two weeks. They were still 10% greater than they were a year ago. Refinances accounted for 39.4% of all mortgage applications, down from 44.3% the week before.
More from CNBC
-
These airlines were the most on-time in 2024
-
Restaurant chains that closed locations last year
-
MSG Networks, home of Knicks and Rangers, goes dark for Optimum cable customers
During the two weeks, mortgage applications for home purchases decreased 13%, and they were 17% fewer than they were a year ago. Even though December is usually the quietest month of the year for home sales, the annual comparison reveals significant weakening, and these figures are seasonally adjusted. Even though there are currently more properties for sale than there were at this time last year, many of them have been lying on the market for months because of exorbitant pricing and rising loan rates.
According to a different Mortgage News Daily survey, 30-year fixed mortgage rates began the week above 7%. All of these figures are highly volatile because this year’s holidays fell in the middle of the week.
There s no way to know where the bond market will open up on Thursday, wrote Matthew Graham, chief operating officer at Mortgage News Daily. The final or first trading day of any given year can see some excess volatility/momentum for reasons that have nothing to do with the normal motivations (economic data, news, policy changes).
Note: Every piece of content is rigorously reviewed by our team of experienced writers and editors to ensure its accuracy. Our writers use credible sources and adhere to strict fact-checking protocols to verify all claims and data before publication. If an error is identified, we promptly correct it and strive for transparency in all updates, feel free to reach out to us via email. We appreciate your trust and support!