Mortgage Demand Plummets by 22% as 2024 Ends
A recent sharp increase in mortgage interest rates has had a significant impact on the demand for mortgages as 2024 comes to a close. According to the Mortgage Bankers Association, total mortgage application volume for the two weeks ending on December 27, 2024, dropped by a staggering 21.9% compared to the previous week. This decline coincided with a rise in the average contract interest rate for 30-year fixed-rate mortgages, which climbed to 6.97% from 6.89%.
Impact of Rising Rates
The increase in mortgage rates, which had been relatively low throughout much of 2024, has led to a notable decrease in both refinance and purchase applications. Applications for refinancing home loans, which are particularly sensitive to interest rate fluctuations, fell by 36% over the two-week period. Despite this decline, they remained 10% higher than the same period last year. On the other hand, applications for mortgages to purchase homes dropped by 13% and were 17% lower than the previous year.
Market Trends and Challenges
While December is typically a slow month for home sales, the current market conditions are showing a significant weakness compared to previous years. Despite an increase in the number of homes available for sale, many properties have been sitting on the market for extended periods due to high prices and rising interest rates. Mortgage rates have now surpassed 7% on the 30-year fixed-rate loans, adding further uncertainty to the housing market.
Expert Insights and Market Volatility
According to Mike Fratantoni, chief economist at the MBA, the recent surge in mortgage rates has led to a decline in housing activity at a time when sales are typically slow. Matthew Graham, chief operating officer at Mortgage News Daily, highlighted the volatility in the bond market, emphasizing the unpredictability of current market trends.
As we navigate through these challenging times in the real estate market, it is essential for potential homebuyers and sellers to stay informed about the latest developments and seek expert advice to make informed decisions. The fluctuating nature of mortgage rates and market conditions underscores the importance of carefully analyzing all factors before entering into any real estate transactions. Let’s stay vigilant and informed as we move forward in the ever-evolving landscape of the housing market.
