Americans flee mortgage market despite lower rates as lenders tighten grip on credit nationwide

Group 1 - Fewer Americans are applying for mortgages despite lower rates, with a 9.7% decline in mortgage applications for the week ending Jan. 2, marking a new low for 2025 [1] - The Mortgage Credit Availability Index fell by 2.6% in December, indicating that lenders are becoming more cautious and credit availability is at its lowest level in three months [5] - The average loan size decreased to $408,700, the smallest in a year, influenced by lower average loan sizes across both conventional and government loan types [3] Group 2 - The Mortgage Bankers Association (MBA) expects mortgage rates to remain around current levels, with potential refinance opportunities when rates dip [2] - The decrease in mortgage availability reversed gains from the previous two months, driven by a reduction in loan programs and tightening documentation requirements [6] - Home prices are expected to remain similar to 2025, with ongoing affordability challenges impacting demand for potential buyers [6]