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Mortgage application activity rose significantly in January, primarily due to increased refinancing activity as mortgage rates dropped to a new low, according to an analysis from NAHB’s Eye on Housing. The Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of total mortgage application volume, increased 12.9% from December on a seasonally adjusted basis and was up 61.3% from a year ago.
The average contract interest rate for 30-year fixed mortgages dropped 13 basis points (bps) to 6.2% following the announcement of $200 billion in mortgage-backed securities (MBS) buybacks by the GSEs. This was 81 bps lower than January 2025’s rate.
By loan type, applications for fixed-rate mortgages (FRMs) and adjustable-rate mortgages (ARMs) increased 12.9% and 7.9% month over month, respectively. FRM applications were up 57.8% year over year and ARM applications more than doubled, rising 113.1%.
By loan size, the average loan amount across the total market increased by 1.1% to $402,000. Average purchase loan sizes increased 2.5% to $435,400, while the refinance loan size increased modestly by 0.2% to $378,000. The average ARM loan size continued to decline, falling 4.4% to $925,600.
