Mortgage Applications Today: Demand for New Home Loans and Refinancing Climbs as Rates Decrease

New home loan mortgage applications increased 4.8% for the week ending Dec. 5, according to the Mortgage Bankers Association. That's up from the week prior when mortgage applications decreased with the Thanksgiving holiday also taken into consideration.

The Market Composite Index, a measure of mortgage loan application volume, increased 4.8% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 49% compared with the previous week.

The Refinance Index increased 14% from the prior week and was 88% higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 2% from one week earlier. The unadjusted Purchase Index increased 32% compared with the previous week and was 19% higher than the same week one year ago.

The refinance share of mortgage activity increased to 58.2% of total applications from 53% the prior week. The adjustable-rate mortgage (ARM) share of activity decreased to 7% of total applications.

The increase in new home loans applications and more people refinancing comes as mortgage interest rates dipped to 6.19% for the week ending Dec. 4, according to Freddie Mac. This is the first time in over a year that rates have dipped below 6.20%.

Meanwhile, the Federal Reserve is set to wrap up its two-day meeting Wednesday, with anticipation growing over the possibility of the third benchmark rate cut.

The Federal Housing Administration (FHA) share of total applications increased to 20.2% from 18.3% the week prior. The Veterans Affairs loans share of total applications increased to 16.4% from 15% the week prior. The USDA share of total applications remained unchanged at 0.3% from the week prior.

"Compared to the prior week’s data, which included an adjustment for the Thanksgiving holiday, mortgage application activity increased last week, driven by an uptick in refinance applications,” said Joel Kan, MBA’s vice president and deputy chief economist.

"Conventional refinance applications were up almost 8 percent and government refinances were up 24 percent as the FHA rate dipped to its lowest level since September 2024. Conventional purchase applications were down for the week, but there was a 5 percent increase in FHA purchase applications as prospective homebuyers continue to seek lower downpayment loans. Overall purchase applications continued to run ahead of 2024’s pace as broader housing inventory and affordability."

Contract rates

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) increased to 6.33% from 6.32%, with points increasing to 0.60 from 0.58 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $806,500) increased to 6.46% from 6.4%, with points decreasing to 0.35 from 0.40 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.  

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.08% from 6.12%, with points decreasing to 0.72 from 0.73 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.71% from 5.73%, with points remaining unchanged at 0.64 (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 5.51% from 5.40%, with points increasing to 0.78 from 0.23 (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.