Homebuyers Make a Final Push Before the Holidays, But Stubborn Rates Limit Momentum

Mortgage activity saw only a slight uptick last week as interest rates continued hovering in the same narrow band they’ve held for nearly two months. For both new buyers and current homeowners, the rate environment is offering very little incentive to jump into the market, according to new data from the Mortgage Bankers Association (MBA).

Overall mortgage applications were up just 0.2% from the previous week on a seasonally adjusted basis—essentially flat and showing little change in consumer behavior.

The average rate for a 30-year fixed mortgage with conforming loan balances at or below $806,500 edged higher to 6.40% from 6.37%. Points also dropped slightly to 0.60 from 0.62 for borrowers making a 20% down payment. This marks the highest level since early October.
For comparison, this same week last year saw average rates nearly half a percent higher, though activity at the time was notably weaker.

Purchase Applications See a Holiday-Season Bump

Even with rates ticking up, mortgage applications to buy a home increased 8% week over week and were 20% higher than the same period a year ago. The surge appears to reflect buyers trying to secure financing before the traditional holiday slowdown.

Government-backed purchase loans FHA, VA, and USDA were a major contributor, rising 9% for the week and reaching their strongest performance since 2023.

“Affordability continues to challenge many markets, so government-backed loans remain appealing for qualified borrowers,” said Joel Kan, MBA Vice President and Deputy Chief Economist. “The average purchase loan size fell to its lowest level in two months, which shows buyers are continuing to target more budget-friendly properties.”

Still, higher rates and elevated home prices are keeping the broader market from gaining stronger traction.

Refinance Activity Slips, But Still Well Above Last Year

Applications to refinance a home loan fell 6% from the previous week. Even so, refinance volume was 117% higher than the same week last year but that increase comes with an important caveat.

Last year’s refinance activity was so low that even modest weekly totals today look enormous by comparison. In reality, there is no new refinance boom; homeowners with low pandemic-era rates still have no reason to reset their loans.

Market Conditions Show Brief Rate Relief Heading Into Holiday Week

Mortgage rates dipped slightly at the start of this week, according to a separate daily survey from Mortgage News Daily.

Matthew Graham, Chief Operating Officer at Mortgage News Daily, noted that the improvement appears tied more to holiday-related market behavior than to any meaningful economic shift.

“Holiday weeks often come with unusual trading patterns, and that’s playing into rate movement now,” Graham explained. “Some of the week’s data contributed as well, including another soft reading in ADP’s weekly employment numbers and investor reactions to talk that Kevin Hassett seen as rate-friendly might be the next Fed Chair.”

Bottom Line: Activity Picks Up, But Rates Still Hold Buyers Back

Some buyers are making a last attempt to secure a home before the holiday season slows the market, but mortgage rates remain a major obstacle. While purchase activity saw a notable weekly increase and government loan demand is strengthening, the overall market remains constrained by affordability pressures and stagnant rates. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.