Mortgage industry experts pointed to a drop in refinance activity as the overall driver of home purchase applications decreasing this week, although it was only slightly and also indicative of persistently elevated mortgage rates hovering near 7%.
According to the Weekly Mortgage Applications Survey from the Mortgage Bankers Association (MBA), mortgage applications decreased 2.0% from last week’s 0.1% increase, for the week ending January 24, 2025. This week’s results include an adjustment for the Martin Luther King holiday.
“Mortgage rates were mixed last week, and the 30-year fixed rate remained unchanged at 7.02%,” said Joel Kan, MBA’s vice president and deputy chief economist. “Application activity was slightly weaker, primarily because of a 7% decline in refinancing across both conventional and government loans.”
According to the MBA the latest survey, the Market Composite Index, a measure of mortgage loan application volume, decreased 2.0% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 9% compared with the previous week. The Refinance Index decreased 7% from the previous week and was 5% higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 0.4% from one week earlier. The unadjusted Purchase Index decreased 4% compared with the previous week and was 7% lower than the same week one year ago, MBA reported.
The refinance share of mortgage activity decreased to 37.1% of total applications from 40.4% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.8% of total applications, MBA reported.
FHA loan applications were a positive this week, increasing slightly, Kan noted.
“Purchase activity decreased slightly, but applications for FHA purchase loans were a bright spot, increasing by 2%,” he said. “New and existing-home sales ended 2024 on a strong note, and if mortgage rates continue to stabilize and for-sale inventory loosens, we expect a gradual pick up in purchase activity in the coming months.”
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