FHA Loan Refinance Demand Jumps 24%
- Applications for a mortgage to purchase a home decreased by 2% for the week ending December 6, 2025, according to data released on December 13, 2025.
- Conventional purchase applications experienced a decrease, while FHA purchase applications saw a 5% increase.
- Mortgage rates on conventional loans continued to climb at the beginning of the week, according to a separate survey by Mortgage News Daily.
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Mortgage Applications Dip Amid Rate Volatility, FHA Loan Interest Rises
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Published December 13, 2025, at 04:36 AM PST
Decline in Mortgage Applications
Applications for a mortgage to purchase a home decreased by 2% for the week ending December 6, 2025, according to data released on December 13, 2025. Despite the weekly decline, applications were 19% higher than the same week in 2024, indicating continued, albeit volatile, demand.
Conventional purchase applications experienced a decrease, while FHA purchase applications saw a 5% increase. This suggests prospective homebuyers are increasingly turning to the Federal Housing Administration (FHA) for loans with lower downpayment requirements.
| Loan Type | Weekly Change | Year-over-Year Change |
|---|---|---|
| Conventional Purchase | Down | Up (Not Specified) |
| FHA Purchase | +5% | Up (Not specified) |
| Total Purchase | -2% | +19% |
Rising Rates and the Federal Reserve
Mortgage rates on conventional loans continued to climb at the beginning of the week, according to a separate survey by Mortgage News Daily. The market is now focused on the Federal Reserve’s meeting on Wednesday, December 18, 2025, and the subsequent commentary from the Fed Chair.
While a cut to the Fed’s overnight borrowing rate is widely anticipated,the market has reacted negatively to previous rate cuts,with mortgage rates actually increasing sharply on two prior occasions. This counterintuitive response highlights the complexity of the current economic habitat.
“The cut itself is not the news the market is waiting for,” explained Matthew Graham,chief operating officer at Mortgage News Daily. “Rather, traders are interested to see each Fed member’s rate outlook via the quarterly release of the Fed’s economic projections.” Graham further noted that the Fed Chair’s press conference often drives significant bond market movements.
Understanding the FHA Loan Increase
The 5% increase in FHA purchase applications indicates a growing segment of homebuyers are prioritizing affordability and lower downpayment options. FHA loans are insured by the Federal Housing Administration and are popular with first-time homebuyers and those with limited savings. The U.S. Department of Housing and Urban Progress (HUD) provides detailed data on FHA loan requirements and benefits.
Compared to conventional loans, FHA loans generally require a lower credit score and a smaller downpayment – as low as 3.5% - making homeownership more accessible.However, FHA loans typically require both upfront and annual mortgage insurance premiums.