Mortgage applications decreased 5% for the week ending Dec. 19, according to the Mortgage Bankers Association—that’s the second straight week of declines.
The Market Composite Index, a measure of mortgage loan application volume, decreased 5% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index decreased 6% compared with the previous week.
The Refinance Index decreased 6% from the previous week and was 110% higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 4% from one week earlier. Meanwhile, the unadjusted Purchase Index decreased 6% compared with the previous week and was 16% higher than the same week one year ago.
The refinance share of mortgage activity increased to 59.1% of total applications from 59% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 8.1% of total applications.
The decrease in applications comes as mortgage interest rates for a 30-year fixed home loan decreased slightly to 6.21% for the week ending Dec. 18, according to Freddie Mac.
The Federal Housing Administration (FHA) share of total applications increased to 20.8% from 19.5% the previous week. The Veterans Affairs loans share of total applications decreased to 15.3% from 16.6% a week ago. The USDA share of total applications remained unchanged at 0.4% from the prior week.
“Overall mortgage application volume fell last week, despite the slight decline in mortgage rates,” said Mike Fratantoni, MBA’s senior vice president and chief economist. “MBA expects the trends of a softening job market, sticky inflation, elevated home inventories, and steady mortgage rates will persist into the new year.
“Purchase application volume last week was 16% higher than a year earlier. We are forecasting continued, modest growth in terms of home sales in 2026,” said Fratantoni.
Contract rates
The average contract interest rate for 30-year fixed mortgages with conforming loan balances ($806,500 or less) decreased to 6.31% from 6.38%, with points decreasing to 0.57 from 0.62 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed mortgages with jumbo loan balances (greater than $806,500) increased to 6.52% from 6.44%, with points decreasing to 0.39 from 0.41 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed mortgages backed by the FHA increased to 6.14% from 6.12%, with points decreasing to 0.75 from 0.82 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed mortgages decreased to 5.7% from 5.72%, with points decreasing to 0.64 from 0.74 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 ARM increased to 5.79% from 5.63%, with points increasing to 0.47 from 0.35 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
Mortgage rates calculated
Mortgage rates are calculated by various factors in the economy, and the length of your loan will also figure into the mortgage rate you qualify for.
The 30-year mortgage rate is tied to the yield of the 10-year Treasury note, according to Fannie Mae. As the yield on the 10-year Treasury note moves, mortgage rates follow.
The yield on the 10-year Treasury note is determined by expectations for shorter-term interest rates in the economy over the duration of a bond, plus a term premium.
