Mortgage demand plummets by nearly 22% in 2024.

Mortgage demand plummets by nearly 22% in 2024.
Mortgage demand plummets by nearly 22% in 2024.
  • December is typically the slowest month of the year for home sales.
  • The annual comparison of seasonally adjusted mortgage figures reveals considerable weakness.
  • The interest rate for 30-year fixed-rate mortgages with conforming loan balances of $766,550 or less rose from 6.89% to 6.97%.

Mortgage demand decreased at the end of December due to a sudden increase in mortgage interest rates, coinciding with the slowest period of the housing market.

The Mortgage Bankers Association's seasonally adjusted index showed a 21.9% decrease in total mortgage application volume for the two weeks ended Dec. 27, 2024, compared to the previous week. This adjustment was made to account for the Christmas holiday, as the MBA was closed over the holiday and only released two weeks of data.

In 2024, the average interest rate for 30-year fixed-rate mortgages with conforming loan balances of $766,550 or less increased by 21 basis points annually, from 6.89% to 6.97%, with points rising from 0.67 to 0.72, including the origination fee, for loans with a 20% down payment.

"According to Mike Fratantoni, chief economist at the MBA, mortgage rates rose to nearly 7% for 30-year fixed-rate loans during the last week of 2024. As a result, both refinance and purchase applications decreased due to the increase in rates, which is typical during this time of year when housing activity slows down."

The number of applications to refinance a home loan decreased by 36% from two weeks prior, despite remaining 10% higher than the same period one year ago. The refinance share of mortgage activity fell to 39.4% from 44.3% the previous week.

During the past two weeks, there was a 13% decline in mortgage applications for purchasing homes, which was 17% lower than the same period one year ago. Despite December being the slowest month for home sales, the annual comparison reveals a significant decline in demand. Although there are currently more homes available on the market compared to the previous year, many of these properties have been sitting for an extended period due to high prices and increased interest rates.

According to Mortgage News Daily, mortgage rates rose above 7% on the 30-year fixed this week due to the significant volatility caused by the holidays falling midweek this year.

"Matthew Graham, chief operating officer at Mortgage News Daily, stated that it is impossible to predict where the bond market will open on Thursday due to the potential excess volatility and momentum on the final or first trading day of any given year, which may not be influenced by the usual motivations such as economic data, news, or policy changes."

by Diana Olick

Business News