December Sees 9.7% Drop in Mortgage Applications Despite Decreased Interest Rates
Micah Abigail LLC founder and credit repair expert Micah Smith speaks to Fox News Digital about the most important differences between FICO 10T and VantageScore 4.0.
Despite lower mortgage rates, fewer Americans are applying for mortgages. This trend is occurring even as lending standards tighten, indicating that high prices and financial pressures are overshadowing any modest rate relief.
According to the Mortgage Bankers Association’s (MBA) latest Weekly Mortgage Applications Survey, mortgage applications fell by 9.7% for the week ending January 2, marking a significant decline and a new low to close out 2025. This roughly 10% drop suggests that fewer individuals are looking to buy or refinance homes at this time.
Joel Kan, Deputy Chief Economist and Vice President at MBA, stated in a press release, “MBA continues to expect mortgage rates to stay around current levels, with spells of refinance opportunities in the weeks when rates move lower.”
TRUMP ANNOUNCES PLANS TO BAN INSTITUTIONAL INVESTORS FROM BUYING SINGLE-FAMILY HOMES
Kan further noted, “Purchase applications were 10% 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 has also decreased to $408,700, the smallest in a year, driven by lower average loan sizes across both conventional and government loan types.
A “for sale” sign sits in front of a single-family home on August 1, 2025, in Miami, Florida. (Getty Images)
Additional data released by the MBA indicates that securing a mortgage is becoming increasingly difficult, even for qualified borrowers. In December, banks and lenders pulled back, offering fewer loan options and requiring more documentation.
‘The Big Money Show’ panel analyzes the state of the housing market after mortgage rates fall to a one-year low.
The Mortgage Credit Availability Index, which measures how easy it is to get approved for a mortgage, fell by 2.6% in December. This decline indicates that lenders are becoming more cautious, with credit availability now at its lowest level in three months.
Kan explained, “The December decrease reversed gains from the prior two months, driven by a reduction in loan programs, including ARM loans and cash-out refinances, along with a tightening in documentation requirements.” He added that both the conforming and jumbo indexes saw declines in December, with the conforming index hitting its lowest level since the survey’s inception in 2011.
Scarlet Oak economic strategist and wealth manager Frances Newton assesses the state of the market and the Federal Reserve’s strategy on ‘Making Money.’
Looking ahead, potential buyers may not find much relief in 2026. Realtor.com Senior Economic Research Analyst Hannah Jones recently told FOX Business that home prices are expected to remain similar to those in 2025, with ongoing affordability challenges continuing to impact demand.
FOX Business’ Daniella Genovese contributed to this report.
Micah Abigail LLC founder and credit repair expert Micah Smith speaks to Fox News Digital about the most important differences between FICO 10T and VantageScore 4.0.
Despite lower mortgage rates, fewer Americans are applying for mortgages. This trend is occurring even as lending standards tighten, indicating that high prices and financial pressures are overshadowing any modest rate relief.
According to the Mortgage Bankers Association’s (MBA) latest Weekly Mortgage Applications Survey, mortgage applications fell by 9.7% for the week ending January 2, marking a significant decline and a new low to close out 2025. This roughly 10% drop suggests that fewer individuals are looking to buy or refinance homes at this time.
Joel Kan, Deputy Chief Economist and Vice President at MBA, stated in a press release, “MBA continues to expect mortgage rates to stay around current levels, with spells of refinance opportunities in the weeks when rates move lower.”
TRUMP ANNOUNCES PLANS TO BAN INSTITUTIONAL INVESTORS FROM BUYING SINGLE-FAMILY HOMES
Kan further noted, “Purchase applications were 10% 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 has also decreased to $408,700, the smallest in a year, driven by lower average loan sizes across both conventional and government loan types.
A “for sale” sign sits in front of a single-family home on August 1, 2025, in Miami, Florida. (Getty Images)
Additional data released by the MBA indicates that securing a mortgage is becoming increasingly difficult, even for qualified borrowers. In December, banks and lenders pulled back, offering fewer loan options and requiring more documentation.
‘The Big Money Show’ panel analyzes the state of the housing market after mortgage rates fall to a one-year low.
The Mortgage Credit Availability Index, which measures how easy it is to get approved for a mortgage, fell by 2.6% in December. This decline indicates that lenders are becoming more cautious, with credit availability now at its lowest level in three months.
Kan explained, “The December decrease reversed gains from the prior two months, driven by a reduction in loan programs, including ARM loans and cash-out refinances, along with a tightening in documentation requirements.” He added that both the conforming and jumbo indexes saw declines in December, with the conforming index hitting its lowest level since the survey’s inception in 2011.
Scarlet Oak economic strategist and wealth manager Frances Newton assesses the state of the market and the Federal Reserve’s strategy on ‘Making Money.’
Looking ahead, potential buyers may not find much relief in 2026. Realtor.com Senior Economic Research Analyst Hannah Jones recently told FOX Business that home prices are expected to remain similar to those in 2025, with ongoing affordability challenges continuing to impact demand.
FOX Business’ Daniella Genovese contributed to this report.
