Purchase, Refi Applications Both See Boost

Mortgage applications skyrocketed last week as both buyers and homeowners locked in rates before they moved any higher.

The Mortgage Bankers Association’s weekly survey shows that the adjusted Market Composite Index — a measure of mortgage loan application volume — jumped by 33.3% last week, reversing a 3.7% dip the week prior.

This is despite rates inching up yet again, hitting 7.09%, their highest point since May 2024.

“Bond yields in the U.S. and abroad continued to move higher in response to concerns over a sticky inflation outlook and still too-high budget deficits, which pushed mortgage rates higher for the fifth consecutive week,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. 

Adjusted purchase applications increased by 27%, while the unadjusted index was up 48% but 2% lower year-over-year.

Refi applications also saw a boost, up 44% on the week and 22% YOY. Their share of mortgage activity rose to 42.7% of total applications, edging closer to their past-decade average of 58% after tanking post-Covid.

Kan cautioned that the data should be understood in the context of the new year and winter trends, not as a harbinger of change.

“This time of the year is a particularly volatile time for application volumes, so it can be more helpful to focus on the level rather than the percent change,” he noted.

December undoubtedly brought an increase in mortgage activity, with lock volume was up 26% YOY, driven by an 18% increase in purchase locks, a 43% rise in cash-out refinances, and an 82% jump in rate-and-term refinances.

Brennan O’Connell, director of data solutions at Optimal Blue, said data like this illustrates how the market is adapting to shifting conditions, remaining resilient.

“It gives me confidence that, even in this rate environment, which isn’t really much better than it was a year ago, you’re seeing an improvement in purchase lending,” O’Connell told The Mortgage Note.

But Wall Street and federal officials are worried about the economy’s trajectory once president-elect Donald Trump takes office.

Trump’s tariff plans could result in exploding inflation, putting pressure on stock and bond markets, while his immigration policies are expected to send labor costs soaring.

The mortgage industry could face even higher rates and record-breaking new home prices.