Mortgage applications slid 9.7 percent over the last two weeks of 2025, according to seasonally adjusted data published in the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending Jan. 2.
As it often has done, MBA’s Market Composite Index, which measures mortgage loan applications by volume, highlighted the importance of accounting for the impact of predictable seasonal patterns to offer an accurate assessment of market conditions in proper context.
On an unadjusted basis, mortgage loan applications dropped by 28 percent over the last two weeks of the year. Meanwhile, the unadjusted Purchase Index decreased 23 percent compared with the previous two weeks but was 10 percent higher than the same week the previous year. On seasonally adjusted basis, the Purchase Index dropped only 6 percent the last two weeks of the year.
President and Deputy Chief Economist Joel Kan offered insight about the survey results in the broader perspective of declining mortgage rates. He focused on shifts in applications for conventional mortgages and refinances, as well as loans insured by the Federal Housing Administration (FHA).
“Mortgage rates started the New Year with a decline to 6.25 percent, the lowest level since September 2024,” Kan said. “Refinance applications were up 7 percent for the week but were at a slower pace than in the weeks leading up to the holidays. 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.”
Kan noted the average loan size was the smallest the industry has seen in a year at $408,700. This could be attributed to lower average loan sizes across both conventional and government loan types, he explained.
The Refinance Index dropped 14 percent when adjusted for the holiday season but was 133 percent higher than the same week one year prior. The unadjusted Refinance Index decreased 31 percent from two weeks ago and was 108 percent higher than in the same week the previous year.
The refinance share of mortgage activity increased to 56.6 percent of total applications compared to the 53.8 percent the previous week, according to MBA. The adjustable-rate mortgage (ARM) share of activity decreased to 6.3 percent of total applications.
The FHA share of total applications increased to 20 percent from 18.4 percent the week prior. The share of applications for loans insured by the Department of Veterans Affairs (VA) rose to 17.3 percent from 16.3 percent the week before and the share of applications for loans administered by the U.S. Department of Agriculture (USDA) increased to 0.4 percent from 0.3 percent the week prior.
For conventional 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less), the average contract interest rate decreased to 6.25 percent from 6.32 percent, with points decreasing to 0.57 from 0.59 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $806,500) dropped to 6.32 percent from 6.46 percent, with points increasing to 0.42 from 0.32 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.09 percent from 6.15 percent, with points remaining unchanged at 0.77 (including the origination fee) for 80 percent LTV loans.
For 15-year fixed-rate mortgages, the average contract interest rate declined to 5.64 percent from 5.69 percent, with points decreasing to 0.64 from 0.65 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 5/1 ARMs increased to 5.90 percent from 5.61 percent, with points decreasing to 0.19 from 0.23 (including the origination fee) for 80 percent LTV loans.
The effective rate decreased from the previous week across all loan types.