Slight rate uptick meets steadier spreads and rising foreclosure‑prevention activity
Mortgage rates inched higher from last week’s three‑year low, but stayed well below year‑ago levels as investors weighed Federal Reserve policy, political uncertainty and a narrowing gap between home loan costs and benchmark Treasurys.
“With the economy improving and the average 30‑year fixed‑rate mortgage nearly a percentage point lower than last year, more homebuyers are entering the market,” said Sam Khater, chief economist at Freddie Mac.
“Buyers always should shop around for the best rate, as multiple quotes can potentially save them thousands.”
Freddie Mac’s latest Primary Mortgage Market Survey showed the 30‑year fixed rate averaged 6.09% as of January 22, up slightly from 6.06% a week earlier and down from 6.96% a year ago.
The 15‑year fixed rate averaged 5.44%, compared with 5.38% last week and 6.16% a year prior.
Spreads narrow as markets watch the Fed
While the Fed’s three cuts in 2025 and guidance for one reduction in 2026 helped set the tone, economists stressed that longer‑term borrowing costs still tracked the 10‑year Treasury more closely than the policy rate.
“The idea is to tighten the spread between mortgage rates and 10‑year Treasurys,” said Realtor.com senior economist Jake Krimmel, commenting on proposals to have Fannie Mae and Freddie Mac buy additional mortgage bonds.
“This could bring rates down in the short run by a small amount, but to really move mortgage markets, you would need large, sustained, and credible asset purchases.”
Krimmel also noted that lenders typically used the 10‑year as a base, with spreads narrowing as markets priced in slower inflation and a cautious Fed.
Narrowing spreads between Treasury yields and mortgage rates have begun to put downward pressure on borrowing costs, even when bond yields held relatively steady.
Refinancing wave built as distress aid ticked higher
Lower rates continued to stir activity. Mortgage Bankers Association data showed refinance applications up about 20% week over week in mid‑January, accounting for more than 60% of total applications as the average 30‑year contract rate slipped to roughly the mid‑6% range.
“These lower rates prompted greater refinance activity from conventional and VA refinance borrowers,” said Joel Kan, MBA vice president and deputy chief economist, adding that applications hit their strongest level since late 2025.
At the same time, Fannie Mae and Freddie Mac appeared to ramp up foreclosure‑prevention efforts. According to a Federal Housing Finance Agency foreclosure‑prevention report, the enterprises completed tens of thousands of loan modifications and other actions over the most recent quarter, with serious‑delinquency rates holding near post‑pandemic lows.
For buyers, timing the bottom still looked risky
With the 30‑year average still roughly a percentage point below last year and spreads off their 2025 highs, waiting for a sub‑6% rate could prove costly if tight inventory kept prices firm. Narrowing spreads alone are unlikely to deliver a sudden rate plunge, but they signals a market gradually normalizing from the post‑2022 shock.
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