Staff Reporter
US mortgage rates surged to their highest point in nearly six months during the Christmas holiday week, leading to a decline in home purchase applications and a significant drop in refinancing activity.
According to data from the Mortgage Bankers Association released Thursday, the contract rate on a 30-year mortgage rose by 8 basis points to 6.97% for the week ending December 27, following a 14-basis-point increase the week prior.
As a result, the association’s index for home-purchase applications fell nearly 7%, reaching its lowest level since mid-November. Meanwhile, the refinancing index plummeted over 23%, marking a one-year low. Although these figures are adjusted for seasonal fluctuations, they often experience significant variability around the year-end holidays.
Mortgage rates are closely following Treasury yields, which continued to rise in late December after Federal Reserve officials indicated a slower pace of interest rate cuts in 2025 due to persistent inflation. According to Mortgage News Daily, which provides more frequent updates on home financing costs, the 30-year fixed mortgage rate reached 7.07% on Tuesday.
Despite the year-end increase in mortgage rates, recent data from the National Association of Realtors suggests that potential homebuyers are becoming more accustomed to a higher interest rate environment. In November, when rates averaged around 6.8%, the index for contract signings for previously owned homes rose to its highest level since February 2023.
The Mortgage Bankers Association (MBA) has been conducting its survey weekly since 1990, gathering responses from mortgage bankers, commercial banks, and thrifts. This data represents over 75% of all retail residential mortgage applications in the United States.
