US Mortgage Market Stabilizes in January
The U.S. mortgage market showed signs of stabilization in January, with improved whole loan pricing across agency, jumbo, and conforming products. According to MIAC Analytics, mortgage spreads tightened due to strong investor demand and limited loan inventory, despite elevated Treasury yields.
- The stabilization comes as the Federal Reserve held its benchmark interest rate steady in its January 2026 meeting, following three rate cuts in the last quarter of 2025. This pause is aimed at assessing incoming economic data before making further adjustments. - A key factor in the tightening of mortgage spreads was a government directive for Government-Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, to purchase $200 billion in mortgage-backed securities (MBS). This move was intended to increase demand for MBS and lower mortgage rates. - As of early February 2026, the average 30-year fixed mortgage rate hovered around 6.11% to 6.21%. This is a significant decrease from the highs seen in early 2025, providing more stability for potential homebuyers. - Housing inventory saw a 10% year-over-year increase in January, offering more options for buyers. However, the national supply remains approximately 17.2% below pre-pandemic (2017-2019) levels, which continues to support home prices. - The market saw a surge in refinance activity in January, with rate-and-term refinances jumping 50% month-over-month as homeowners took advantage of the lower rates. - Investor demand for non-Qualified Mortgage (non-QM) securities is expected to be strong in 2026, contributing to an anticipated 25% increase in overall non-agency MBS issuance for the year. - Mortgage credit availability expanded in January, with lenders broadening their offerings for products like ARMs, cash-out refinances, and loans for second homes, particularly for borrowers with strong credit profiles. - Looking ahead, forecasts for the remainder of 2026 are mixed, with some analysts, like those at the Mortgage Bankers Association, expecting rates to remain in a narrow range, while others anticipate one or two more rate cuts from the Federal Reserve depending on inflation and labor market data.
