Mortgage Applications Drop: Opportunities in a Shifting Market
Mortgage demand declined at the end of December 2024 as interest rates rose sharply, coinciding with the usual slowdown in the housing market during the holiday season.
For the two weeks ending December 27, 2024, total mortgage application volume dropped by 21.9% compared to the previous period, according to the Mortgage Bankers Association (MBA). This decline reflects both the holiday season and the MBA’s temporary closure. During this time, the average interest rate for a 30-year fixed mortgage with a loan balance of $766,550 or less increased to 6.97%, up from 6.89%. The overall cost of these loans also edged higher.
While mortgage rates had been lower for much of 2024 compared to the previous year, they were now 21 basis points higher than in 2023. As a result, both refinancing and home purchase applications saw declines. Refinancing applications dropped by 36%, although they remained 10% higher than the same time last year. Applications for home purchases fell by 13% compared to two weeks prior, and were 17% lower than last year. December is typically the slowest month for home sales, but the year-over-year drop is still notable. Although there are more homes available on the market than last year, many have been sitting for months due to high prices and interest rates.
Mortgage rates remained above 7% for 30-year fixed loans recently, and given the timing of the holidays, there has been some added volatility in these numbers.
Despite the recent slowdown in mortgage activity, there are still significant opportunities in the market. With more homes available than last year and the potential for rates to fluctuate, now could be a great time to consider buying. If you’re ready to take the next step, working with the right professionals can help you navigate these changing conditions and secure a great deal. Feel free to reach out to me if you’d like to discuss how to make the most of this market, whether you’re buying or selling!
