Homes in Hercules, California, US, on Wednesday, Nov. 12, 2025.
David Paul Morris | Bloomberg | Getty Images
Mortgage rates moved lower to end 2025 and start 2026, but that did little to pull demand back to the market.
For the week ending January 2, 2026, total mortgage application volume fell 9.7% on a seasonally adjusted basis from two weeks earlier, according to the Mortgage Bankers Association’s seasonally adjusted index. There were additional adjustments made for the holidays, and the read is for two weeks because the MBA did not report last week.
Over those two weeks, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $806,500 or less, decreased to 6.25% from 6.32%, with points decreasing to 0.57 from 0.59, including the origination fee, for loans with a 20% down payment. That was the lowest level since September 2024.
Applications to refinance a home loan dropped 14% over the two week period but were still 133% higher than the same week one year ago.
“FHA refinance applications saw a 19 percent increase, although that was a partial rebound from a drop the week before,” said Joel Kan, an MBA economist in the release. “MBA continues to expect mortgage rates to stay around current levels, with spells of refinance opportunities in the weeks when rates move lower.”
Applications for a mortgage to purchase a home fell 6% from two weeks earlier and were 10% higher year over year.
“The average loan size was $408,700, the smallest in a year, driven by lower average loan sizes across both conventional and government loan types,” Kan added.
As mortgage rates fall, there is less demand for adjustable-rate loans. They do offer lower rates, but with higher risk, so they are less popular when fixed interest rates are lower. The ARM share of activity decreased to 6.3% of total applications.
Mortgage rates have barely moved at all to start this week, according to a separate survey from Mortgage News Daily, as there has been little economic data to influence them. That will change Wednesday with two labor market reports and ISM’s service sector report set for release.
“Individually, none of these are as heavy hitting as Friday’s forthcoming jobs report, but if they all sing a similar tune, it could definitely get rates moving (for better or worse),” wrote Matthew Graham, chief operating officer of Mortgage News Daily. “Specifically, if the data is stronger, it would likely push rates higher and vice versa.”
