Mortgage Application Activity Starts 2025 in Decline

Fewer mortgage applications were being processed for the week ending Jan. 3, according to data from the Mortgage Bankers Association (MBA); the week’s results included an adjustment for the New Year’s holiday.

The Market Composite Index, the MBA’s measure of mortgage loan application volume, decreased 3.7% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index increased by 47% compared with the previous week.

The seasonally adjusted Purchase Index decreased 7% from one week earlier while the unadjusted index rose by 43% – the latter was also 15% lower than the same week one year ago.

The Refinance Index increased 2% from the previous week and was 6% lower than the same week one year ago; the refinance share of mortgage activity increased to 40.8% of total applications from 39.4% the previous week.

Among the government programs, the FHA share of total applications increased to 16.9% from 16.6% the week prior while the VA share of total applications increased to 16.2% from 15.7% and the USDA share of total applications increased to 0.6% from 0.4%.

“Applications decreased last week as rising mortgage rates continued to discourage buyers from entering the market and put a damper on purchase activity,” said Joel Kan, MBA’s vice president and deputy chief economist. “The 30-year fixed rate increased for the fourth consecutive week, reaching 6.99% – the highest rate since July 2024. Purchase applications declined for both conventional and government loans and dropped to the slowest weekly pace since February 2024. Refinance applications increased despite higher rates, but the increase was compared to recent low levels and was entirely driven by an increase in VA refinances, which continue to show weekly swings.”