Recent Trends in Mortgage Applications

In a recent survey published by the Mortgage Bankers Association (MBA), it was revealed that mortgage applications in the United States have decreased by 3.7% in the week ending January 3. This decline comes after a significant 12.6% drop in the previous week, indicating a potential cooling in the housing market.

Market Index and Interest Rates

The Market Index experienced a slight decrease from 174.9 to 168.4, while the Purchase Index fell from 136.7 to 127.7. Interestingly, the Refinance Index saw a minor increase from 395.1 to 401.1. The average contract interest rate for 30-year fixed-rate mortgages rose slightly from 6.97% to 6.99%, marking the highest level since July.

Expert Insights

Joel Kan, MBA's Deputy Chief Economist, noted that purchase applications have declined for both conventional and government loans, reaching the slowest weekly pace since February 2024. Despite higher rates, refinance applications have increased, primarily driven by an uptick in VA refinances, which continue to exhibit weekly fluctuations.