Mortgage demand dives nearly 22% to end 2024

A sharp rise in mortgage interest rates toward the end of December took its toll on mortgage demand, hitting just as the housing market entered its typically slowest stretch of the year.

Total mortgage application volume for the two weeks ended Dec. 27, 2024, dropped 21.9% compared with the week before that period, according to the Mortgage Bankers Association’s seasonally adjusted index. An additional adjustment was made to account for the Christmas holiday. The MBA released two weeks of data after being closed over the holiday.

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. Mortgage rates, which had been lower than the previous year for much of 2024, were 21 basis points higher annually.

“Mortgage rates moved higher through the last full week of 2024, reaching almost 7% for 30-year fixed-rate loans,” said Mike Fratantoni, chief economist at the MBA. “Not surprisingly, this increase in rates — at a time when housing activity typically grinds to a halt — resulted in declines in both refinance and purchase applications.”

Applications to refinance a home loan, which are most sensitive to interest rate gyrations, fell 36% from two weeks before. Still, they remained 10% higher than the same period one year ago. The refinance share of mortgage activity decreased to 39.4% of total applications from 44.3% the previous week.

Applications for a mortgage to purchase a home fell 13% during the two weeks and were 17% lower than the same period one year ago. While December is typically the slowest month of the year for home sales, these numbers are seasonally adjusted, and the annual comparison shows considerable weakness. While there are more homes on the market now than there were last year at this time, many of those houses have been sitting for months, due to high prices and higher interest rates.

Mortgage rates started this week above 7% on the 30-year fixed, according to a separate survey from Mortgage News Daily. Given the holidays falling midweek this year, there is significant volatility in all of these numbers.

“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).”