Mortgage market is as cold as ice with stubborn rates

A deep winter freeze is halting mortgage volume. 

The 30-year fixed-rate mortgage remains above the psychological 7% barrier, and both refinance and purchase activity has stalled, the Mortgage Bankers Association reported. Application volume on the whole rose just 0.1% for the week ending Jan. 17, compared to the prior stretch. 

"Incoming economic data are likely to keep the Federal Reserve on hold for now, while uncertainties about economic policy are likely to keep longer-term rates, including mortgage rates, steady at those levels," said Mike Fratantoni, the MBA's senior vice president and chief economist, in a press release.

Steep rates and high home prices have shrunk the pool of qualified home buyers. Lenders recently indicated to National Mortgage News that finding home loan applicants is going to be the biggest challenge in 2025. 

New consumers are barely trickling into the market, with the MBA's Purchase Index up 1% last week, compared to the prior seven days. Interest rates for various loan products fell, but not enough to encourage homeowners as the Refinance Index fell 3% from the prior period. Refis however remain up 42% compared to last January. 

The average contract interest rate for a 30-year FRM fell seven basis points, but still sat at 7.02%. Jumbo loans, which the MBA is still tying to the 2024 conforming loan limit of $766,550, also fell slightly but carried average interest rates of 6.98% last week. 

The share of government-backed loan lending fell last week, with conforming loans accounting for 68.5% of applications. Interest rates for Federal Housing Administration loans were nearly flat week-over-week, at 6.74%.

Also rising only two basis points was the average 15-year FRM, up to 6.45% last week. Rates shot up 23 basis points for adjustable rate mortgages to 6.41%; the products made up 5.5% of application volume.