Mortgage applications plunged dramatically in the final weeks of 2024, dropping 21.9% for the period ending December 27, according to new data from the Mortgage Bankers Association (MBA). The steep decline came as interest rates climbed higher, coinciding with the housing market's traditionally slowest period.
The average 30-year fixed mortgage rate increased to 6.97% from 6.89%, with points rising to 0.72 from 0.67 for loans with a 20% down payment. Rates ended the year 21 basis points higher compared to the same period in 2023.
"Mortgage rates moved higher through the last full week of 2024, reaching almost 7% for 30-year fixed-rate loans," noted Mike Fratantoni, MBA's chief economist. The rate increase, combined with typical seasonal slowdown, led to declines in both refinance and purchase applications.
Refinance applications saw the sharpest decline, falling 36% over the two-week period, though remaining 10% above year-ago levels. The refinance share of total mortgage activity dropped to 39.4% from 44.3%.
Home purchase applications decreased 13% during the period and stood 17% below the previous year's levels. While housing inventory has improved compared to last year, many properties have remained unsold for extended periods due to elevated prices and interest rates.
The start of 2025 has seen rates climb above 7% for 30-year fixed mortgages, according to industry data. Market analysts note that year-end trading patterns could bring additional rate volatility, as holiday-shortened weeks often experience irregular market movements.
This decline in mortgage activity reflects broader challenges in the housing market, where higher borrowing costs continue to impact both potential homebuyers and current homeowners looking to refinance.