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While mortgage rates moved higher over the last weeks of 2024 and home purchase applications have declined, housing activity through the end of the year over the holidays saw its typical lull in both buying and refinancing activity.
According to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac released Thursday, mortgage rates hit 6.9%, their highest point since July. This is a move up from last week’s average of 6.85% and the previous week’s increase to 6.72%
“Inching up to just shy of seven percent, mortgage rates reached their highest point in nearly six months,” said Sam Khater, Freddie Mac’s chief economist. “Compared to this time last year, rates are elevated and the market’s affordability headwinds persist. However, buyers appear to be more inclined to get off the sidelines as pending home sales rise.”
Looking at mortgage applications, these saw a notable decrease of 21.9% from two weeks earlier, according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association’s (MBA) for the week ending December 27, 2024. The results include an adjustment to account for the Christmas holiday.
“Mortgage rates moved higher through the last full week of 2024, reaching almost 7% for 30-year fixed-rate loans,” said Mike Fratantoni, MBA’s SVP and chief economist. “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.”
Here’s a look at some of the recent home purchase application data: The Market Composite Index, a measure of mortgage loan application volume, decreased 21.9% on a seasonally adjusted basis from two weeks earlier.
On an unadjusted basis, the Index decreased 55% compared with two weeks ago. The holiday adjusted Refinance Index decreased 36% from two weeks ago and was 10% higher than the same week one year ago. The unadjusted Refinance Index decreased 62% from two weeks ago and was 6% lower than the same week one year ago.
The seasonally adjusted Purchase Index decreased 13% compared with two weeks ago. The unadjusted Purchase Index decreased 48% compared with two weeks ago and was 17% lower than the same week one year ago.
The refinance share of mortgage activity decreased to 39.4% of total applications from 44.3% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.2% of total applications.
On the mortgage rate increase, Realtor.com Senior Economist Joel Berner commented, “With the embers of the post-pandemic inflation fire still burning, mortgage rates are getting stuck near 7% and the housing market is feeling the heat.
“Though these high mortgage rates are a serious affordability headwind for prospective home buyers who are already struggling with high listing prices that continue to grow, there are some positive indicators that the market is still chugging along. The most recent releases of pending home sales, new home sales, and existing home sales data showed growth from a year ago. At this point, it seems that buyers have accepted high-6% mortgage rates as “the new normal” and are starting to make the moves that they had previously postponed instead of trying to time the market for more favorable financing. For those with a New Year’s resolution of buying a home, we expect to see 2025 usher in continued growth in the inventory of homes for sale.”
To view the full mortgage applications report, click here.
To view the full mortgage rate report, click here.
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