WASHINGTON — U.S. mortgage applications fell for a second straight week even as borrowing costs edged lower, underscoring how affordability pressures and economic uncertainty continue to weigh on housing demand.
Applications for home loans declined 5% for the week ending Dec. 19, according to the Mortgage Bankers Association. The MBA’s Market Composite Index, a measure of overall application volume, dropped 5% on a seasonally adjusted basis from the prior week and 6% on an unadjusted basis.
The pullback came as the average rate on a 30-year fixed mortgage slipped modestly (see related story). Mortgage buyer Freddie Mac said Wednesday the average rate fell to 6.18% from 6.21% last week. A year ago, it averaged 6.85%. Rates have largely hovered in a narrow range since late October, when the 30-year mortgage fell to its lowest level in more than a year.
Demand Weakens
Despite the slight easing, demand weakened across both purchase and refinance activity. The MBA said the seasonally adjusted Purchase Index fell 4% from the prior week, while the Refinance Index dropped 6%. Still, refinancing activity remained strong compared with last year, running 110% higher than the same week in 2024, reflecting how far rates have retreated from last year’s levels.
“Overall mortgage application volume fell last week, despite the slight decline in mortgage rates,” Mike Fratantoni, the MBA’s senior vice president and chief economist, said in a statement, adding that the trade group expects trends including a softening job market, sticky inflation, elevated housing inventories and relatively steady mortgage rates to persist into the new year.
The 10-year Treasury yield was around 4.15% on Wednesday of this week, slightly higher than a week earlier.
Slower YoY Volume
Sales of previously occupied U.S. homes rose in November from October but were slower than a year earlier for the first time since May, despite mortgage rates holding near their recent lows. Through the first 11 months of the year, existing-home sales were down 0.5% from the same period a year earlier.
Looking ahead, economists generally expect the average rate on a 30-year mortgage to remain slightly above 6% next year, suggesting that modest rate declines alone may not be enough to reignite demand unless prices or incomes shift more favorably.
