Don’t stress out. If we ignore the past 5 days, today’s mortgage rates are still the lowest since early 2023.  That said, they’re up a bit from last week and they moved moderately higher day-over-day. Last week’s news regarding Fannie and Freddie’s plans to buy $200 bln of MBS (the mortgage-backed securities that directly dictate mortgage rates) made for a rapid drop in the average mortgage rate, but that had largely run its course by Monday. Since then, the market has been finding its range. Mortgages have also been contending with countervailing forces in the broader bond market. Specifically, Treasury yields and Fed rate expectations have been rising. Just today, the 10yr yield finally broke up and out of a range that has held firm for more than 4 months. Mortgage rates have been insulated from that negative momentum in Treasuries (something that would normally imply an equal amount of negativity in the mortgage world) thanks to Fannie/Freddie MBS purchases. 

Builder confidence slipped to start the year, with the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) falling two points to 37 in January. The erasure of December’s modest gains doesn’t really do much to change the broader picture: builder sentiment remains stuck in a holding pattern near its lowest levels, weighed down by the usual suspects of persistent affordability challenges and rising construction costs. The underlying components weakened across the board. The index measuring current sales conditions dipped one point to 41, while the gauge tracking prospective buyer traffic fell three points to 23—continuing to solidify its status in “low to very low” territory. Most notably, future sales expectations declined three points to 49, slipping below the breakeven level of 50 for the first time since September. “While the upper end of the housing market is holding steady, affordability conditions are taking a toll on the lower and mid-range sectors,” said NAHB Chairman Buddy Hughes. “Buyers are concerned about high home prices and mortgage rates, with down payments particularly challenging given elevated price-to-income ratios.” There was at least a partial offset on the rate front. NAHB Chief Economist Robert Dietz pointed to a recent decline in mortgage rates to the lowest level in three years. However, most survey responses were collected before the announcement that Fannie Mae and Freddie Mac would purchase $200 billion in mortgage-backed securities, meaning any benefit from that policy action was largely not reflected in January’s results.

How are we halfway done with January already? Wasn’t it just New Year’s? Some lenders slow down in the winter, but I am hearing reports of great Decembers and Januarys. Wanna fire up your sales team? Here’s an article: “The golden handcuffs are slipping in the U.S. housing market.” As industry vets knew they would eventually, borrowers with “once-in-a-lifetime” rates are refinancing, or selling houses with those mortgages on them. There is a lot of news and change, both locally and globally, for originators to follow, and the current STRATMOR Group blog is titled, “Helping Borrowers in a Market Defined by Complexity and Change.” (Today’s podcast can be found here and this week’s are sponsored by Figure. Take advantage of Figure’s technology and products like its fixed HELOC, DSCR loan, piggyback loan, and direct debt paydown, helping you serve more of your existing network and expand into new markets. Hear an interview with FINOFR’s Keith Kelly on how to take the friction out of the loan process for everyone.) Products, Services, and Software for Brokers and Lenders After years of elevated mortgage rates, tight inventory, and stretched affordability, the housing market is beginning to show signs of a thaw. In 2026, the question isn’t whether conditions are improving. It’s how quickly momentum will build and what will sustain it. Join First American Data & Analytics for a 2026 Housing Market Outlook webinar featuring Odeta Kushi, Deputy Chief Economist at First American. We’ll break down the data shaping today’s market, from mortgage rates and Fed policy to affordability, labor market fundamentals, demographic demand, new-home construction, and regional performance, and highlight the signals pointing to a measured, gradual recovery. If the market is shifting from freeze to forward motion, this webinar is your roadmap for what comes next. Register now to gain the insights you need to navigate a year defined by progress, not a breakout, in 2026.

Last week reinforced the lesson anything can happen in the bond market–even with less than an hour left on an otherwise uneventful day. There’s no way to plan ahead for that eternal caveat, so we’re left to observe prevailing momentum/volatility and simply consider risks on the event calendar. In today’s case, bonds are moderately weaker overnight with 10yr yields pushing the upper boundary of the trading range. MBS are outperforming modestly and without any other specific justifications, we will continue to assume a combination of actual and expected GSE purchases. The calendar is effectively silent with only two reports that never have a meaningful impact.

A handful of former Fed officials noted that the markets’ measured response to a probe into Fed Chair Jerome Powell was a result of pushback from Trump allies.

The government securitization guarantor could move forward with more big-picture initiatives as well this year now that it officially has a confirmed president.

Mortgage applications for new-home purchases decreased 15.2% on a seasonally adjusted basis in December, according to the Mortgage Bankers Association.

This week the conforming 30-year fixed rate mortgage fell 10 basis points, with Optimal Blue data showing it broke through, at least briefly, the 6% level.

United Wholesale Mortgage sees this branding partnership as an opportunity to recruit workers in its home market in the Detroit area, CMO Sarah DeCiantis said.

Data-Driven Weakness

It was a reasonably straightforward day for the bond market. Trading was flat overnight, then weaker after the 8:30am Jobless Claims data.  That report is hit and miss as a market mover, but a sub-200k print without any recent seasonal spike is certainly worth a few bps of weakness. Impacts were most notable in Fed Funds Rate expectations, which have now fully eliminated any possibility for a January cut and lowered the probability of a March cut from over 40% last week to under 20% today. In the bigger picture, longer-term rates remain squarely range-bound and MBS remain broken out the top of their comparable range thanks to GSE purchases.

Econ Data / Events

Continued Claims (Jan)/03

1,884K vs 1890K f’cast, 1914K prev

Jobless Claims (Jan)/10

198K vs 215K f’cast, 208K prev

NY Fed Manufacturing (Jan)

7.70 vs 1 f’cast, -3.90 prev

Philly Fed Business Index (Jan)

12.6 vs -2 f’cast, -10.2 prev

Market Movement Recap

08:31 AM First move is weaker after lower jobless claims. MBS down an eighth and 10yr up 2.5bps at 4.157

10:50 AM Lows of the day after rebounding into the 9:30am hour. MBS down 6 ticks (.19) and 10yr up 2.6bps at 4.159

01:48 PM MBS down 6 ticks (.19) and 10yr up 2.1bps at 4.153

03:15 PM Weakest levels for Treasuries with 10yr up 3.2bps at 4.164.  MBS still down 6 ticks (.19).