According to recent data released by the Mortgage Bankers Association (MBA), U.S. mortgage rates significantly jumped at the end of December. This resulted in a drop in mortgage demand and refinance activity.
The contract rate on a fixed 30-year mortgage was 6.97% in the two weeks ending December 27. This marked an 8 basis point increase compared to 6.89% the week before. On a year-to-year basis, the rate soared by 21 basis points.
Soaring mortgage rates, coupled with typically slower activity during the holidays, have resulted in a 22% drop in mortgage applications. Additionally, refinance activity for home loans has been 36% down in the same period.
“Mortgage rates moved higher through the last full week of 2024, reaching almost 7% for 30-year fixed-rate loans,” Mike Fratantoni, chief economist at the MBA, said in a release. “Not surprisingly, this increase in rates — at a time when housing activity typically grinds to a halt — resulted in declines in both refinance and purchase applications.”
Mortgage News Daily, which provides updates more frequently than MBA’s weekly releases, shared that the 30-year fixed mortgage rate has already surpassed 7% this week and is sitting at 7.07%.
Due to economic uncertainty in 2025, most economists agree that predicting the mortgage rates is a challenging task. However, the expectation is that it will sit below 7% on average throughout the year.