Mortgage rates steady as 2026 housing outlook brightens

Mortgage rate movements remained calm in the opening days of the new year, and there’s little on the horizon to suggest that the pattern will change anytime soon.

At HousingWire’s Mortgage Rates Center on Tuesday, rates for 30-year conforming loans averaged 6.37%, up 1 basis points from one week ago. Rates for 30-year jumbo loans rose 3 bps to 6.22% while rates for 30-year mortgages through the Federal Housing Administration (FHA) were down 1 bps to 6.09%.

Mortgage News Daily, meanwhile, reported Monday that 30-year fixed rates were at 6.19%, a figure that was near a two-month low point.

Rates have remained in a relatively narrow band for the past three months. They dropped below 6.5% in September, shortly before the Federal Reserve implemented the first of three straight 25-bps cuts. But they’ve yet to move below 6%, a place they haven’t been since August 2022.

The odds of the Fed continuing its rate-cutting campaign at the end of January are low, according to the CME Group’s FedWatch tool. On Tuesday, 82% of interest rate traders predicted the federal funds rate would remain unchanged at a range of 3.5% to 3.75% after the Fed’s Jan. 27-28 meeting. Only 65% thought so in early December.

Optimism rising for 2026

Although mortgage rates have remained static for some time, the 2026 housing market outlook is generally strong, as seen in HousingWire’s 2026 Housing Market Forecast.

Other sources paint a similar picture. The National Association of Realtors (NAR), for example, calls for a 14% year-over-year increase in existing home sales. Last month, NAR’s pending home sales report showed rising activity across the country, although surveyed Realtors expressed relatively low confidence for increased buyer and seller traffic in the next three months.

Mat Ishbia, president and CEO of United Wholesale Mortgage (UWM), said this week that market conditions have moved in favor of buyers. He pointed to Redfin data showing that there were 37% more sellers than buyers in the market as of November — the largest such gap since 2013.

“We think more houses are going to come on the market here soon, and as more come on the market — and more buyers are eligible because of interest rates and opportunities — it’s going to be an amazing 2026 for the purchase side of the business, along with hopefully the refinance side, if rates drop a little bit more,” Ishbia said in his monthly “3 Points” video.

Ishbia also believes that the Trump administration is poised to help housing in the coming year through a new policy agenda.

“As we all know, (Trump) is really focused on dropping interest rates. We know Jerome Powell is going to be out … so there will be a new Fed chair,” Ishbia said. “What does that mean? Lower rates, possibly. A big housing plan. I don’t know all the details, but I do know this: I’m very optimistic and positive (about) the fact that our president is focused on it.”

Mortgage spreads look positive

Mortgage rates tend to move in tandem with Treasury rates, and spreads between the 10-year Treasury rate and the 30-year mortgage rate are considerably lower than they were in 2023 and 2024.

HousingWire Lead Analyst Logan Mohtashami recently called spreads “the hero of housing in 2025” as the most recent figure of 2.05% is about 20 bps lower than it was a year earlier.

Analysts at Keefe, Bruyette & Woods (KBW) discussed tighter mortgage spreads in a note published this week. Bose George and Frankie Labetti said that the increased role of the government-sponsored enterprises (GSEs) in mortgage-backed securities (MBS) purchases is the key driver of the trend.

KBW’s analysis found that GSE holdings of MBS grew by 77% year over year during the six-month period ending in November, with Fannie Mae and Freddie Mac securing a total of $247 billion in holdings at that time.

There’s room for them to purchase more as each agency has a cap of $250 billion under the Preferred Stock Purchase Agreements (PSPAs), although that figure was reduced to $225 billion by the Federal Housing Finance Agency under the Biden administration.

“Since there is meaningful room under the cap, we would expect continued buying from the GSEs in 2026 to keep spreads tight (or tighten them further) in order to support mortgage rates,” George and Labetti wrote. “Further, since the PSPA is an agreement between FHFA and the US Treasury, it could be amended to allow the GSEs to purchase more MBS, either temporarily or permanently.

“Finally, we would note that GSE retained portfolio growth would be accretive to GSE earnings, which could be a modest positive in terms of any potential privatization effort.”