Mortgage Applications Decline 9.7% Despite Lower Rates

U.S. mortgage applications declined by 9.7% over the two weeks ending January 2, 2026, according to the Mortgage Bankers Association (MBA). This period included adjustments for the holidays.

During this timeframe, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.25% from 6.32%, marking the lowest level since September 2024.

Refinance applications dropped 14% over the two-week period but remained 133% higher than the same week one year ago. Joel Kan, an MBA economist, noted that "FHA refinance applications saw a 19 percent increase, although that was a partial rebound from a drop the week before."

Purchase applications fell 6% from two weeks earlier and were 10% higher year over year. Kan added that "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."

As mortgage rates declined, the share of adjustable-rate mortgages (ARMs) decreased to 6.3% of total applications. Mortgage rates have remained relatively stable at the start of this week, with upcoming labor market reports and the ISM service sector report potentially influencing future rate movements.