Mortgage Applications Decline for Second Consecutive Week
Summary:
The Mortgage Bankers Association (MBA) reports a 5% seasonally-adjusted drop in mortgage applications for the week ending December 19, marking two straight weeks of declines. The Refinance Index fell 6% week-over-week, while purchase applications decreased 4%. Despite the dip, purchase volume remains 16% higher than 2023 levels. Economists attribute the trend to stable-but-elevated mortgage rates and shifting housing market dynamics.
What This Means for You:
- Refinance window narrowing: With rates hovering near 6.18%, homeowners should run break-even calculations now before potential future rate hikes
- Purchase market advantage: 16% annual growth in purchase apps suggests competitive conditions – get pre-approved and consider off-season buying strategies
- ARM consideration: Rising ARM shares (up to 8.1%) indicate some borrowers are betting on future rate drops – consult a mortgage broker about hybrid options
- 2026 forecast alert: MBA predicts modest sales growth, suggesting inventory pressures may ease – but rate volatility could disrupt timing
Original Post:
Home loan applications fell in consecutive weeks for the first time in two months, according to the Mortgage Bankers Association.
The MBA’s Market Composite Index dropped 5% on a seasonally-adjusted basis from one week prior. This follows a 3.8% decline the previous week. On an unadjusted basis, the index fell 6%.
“Overall mortgage application volume fell last week, despite the slight decline in mortgage rates,” said Mike Fratantoni, MBA’s chief economist. The 30-year fixed-rate mortgage currently sits at 6.18%, per Freddie Mac data.
The Refinance Index declined 6% weekly but remains 111% higher year-over-year. Purchase applications fell 4% (seasonally-adjusted) but show 16% annual growth. New-home purchases saw a 3.1% annual increase in November – the largest since July.
Key rate movements included:
- Jumbo 30-year fixed: Up 8bps to 6.52%
- FHA 30-year fixed: Up 2bps to 6.14%
- 5-year ARMs: Up 16bps to 5.79%
Extra Information:
Freddie Mac PMMS – Tracks weekly mortgage rate trends that directly impact application volumes
Census New Home Sales – Provides context on the 3.1% annual new-home purchase increase
MBA Research – Original source for weekly application survey methodology
People Also Ask About:
- Will mortgage rates drop in 2026? MBA forecasts steady rates with potential modest declines if inflation cools.
- Is now a good time to refinance? With rates 111% above 2023 lows, only makes sense if lowering rate by ≥0.75%.
- Why are ARMs increasing in popularity? 16bps ARM rate jump suggests lenders pricing in future Fed cuts.
- How do FHA loans compare now? FHA share rose to 20.8% as first-time buyers face affordability challenges.
Expert Opinion:
“The consecutive declines signal market sensitivity to even minor rate fluctuations,” notes housing economist Dr. Lynn Fisher. “While purchase demand remains resilient, the refi pipeline is rate-dependent – we’re seeing strategic borrowers leverage ARMs and government products to maintain affordability in this 6% rate environment.”
Key Terms:
- mortgage application trends December 2025
- refinance index vs purchase index comparison
- FHA loan requirements for first-time buyers
- 5-year ARM rates forecast 2026
- jumbo mortgage rate fluctuations
- housing market inventory impact on applications
- MBA weekly survey methodology explained
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