Mortgage Applications Today: Home Loan Applications Are Still Down Despite Rates at Its Lowest Level

Mortgage applications continue to decline—decreasing 9.7% from two weeks earlier, according to data from the Mortgage Bankers Association for the week ending Jan. 2. The decrease follows a slump leading into the holidays, as home loan demand dropped two straight weeks in mid-December.

The Market Composite Index, a measure of mortgage loan application volume, decreased 9.7% on a seasonally adjusted basis from two weeks earlier. On an unadjusted basis, the Index decreased 28% compared with two weeks ago.

The holiday adjusted Refinance Index decreased 14% from two weeks ago and was 133% higher than the same week one year ago. The unadjusted Refinance Index decreased 31% from two weeks ago and was 108% higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 6% from two weeks earlier. The unadjusted Purchase Index decreased 23% compared with two weeks ago and was 10% higher than the same week one year ago.

The decrease in new home loan applications comes as mortgage interest rates ended 2025 at its lowest level. The average rate on a 30-year fixed home loan decreased to 6.15% for the week ending Dec. 31, according to Freddie Mac.

Meanwhile, the refinance share of mortgage activity increased to 56.6% of total applications from 53.8% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.3% of total applications.

The Federal Housing Administration (FHA) share of total applications increased to 20% from 18.4% the week prior. Veterans Affairs loans share of total applications increased to 17.3% from 16.3% the week prior. The USDA share of total applications increased to 0.4% from 0.3% the week prior.

"Mortgage rates started the New Year with a decline to 6.25 percent, the lowest level since September 2024. Refinance applications were up 7 percent for the week but were at a slower pace than in the weeks leading up to the holidays,” said Joel Kan, MBA’s vice president and deputy chief economist.

"FHA refinance applications saw a 19 percent increase, although that was a partial rebound from a drop the week before. MBA continues to expect mortgage rates to stay around current levels, with spells of refinance opportunities in the weeks when rates move lower."

 “Purchase applications were 10 percent higher than the same week a year ago but were down over the week following decreases in conventional and FHA applications. The average loan size was $408,700, the smallest in a year, driven by lower average loan sizes across both conventional and government loan types," Kan added.

Contract rates

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.25% from 6.32%, with points decreasing to 0.57 from 0.59 (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-rate mortgages with jumbo loan balances (greater than $806,500) decreased to 6.32% from 6.46%, with points increasing to 0.42 from 0.32 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.09% from 6.15%, with points remaining unchanged at 0.77 (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 5.64% from 5.69%, with points decreasing to 0.64 from 0.65 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs increased to 5.9% from 5.61%, with points decreasing to 0.19 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.