Borrowers rushed to lock in lower rates after a rare policy jolt
Mortgage refinance activity jumped last week as borrowers seized on a brief, politically driven rate dip and a broader easing in funding costs, pushing overall mortgage demand sharply higher even as volatility lingered.
Total mortgage application volume rose 28.5% in the week ending January 9, according to the Mortgage Bankers Association (MBA), which adjusted its weekly survey for the New Year’s Day holiday.
The Market Composite Index climbed 28.5% on a seasonally adjusted basis and 65% unadjusted, while refinance activity surged 40% week over week and stood 128% higher than the same week a year earlier.
“Mortgage rates dropped lower last week following the announcement of increased MBS purchases by the GSEs. Lower rates, including the 30-year fixed rate declining to 6.18%, sparked an increase in refinance applications,” Joel Kan, MBA’s vice president and deputy chief economist, said.
“Compared to a holiday adjusted week, refinance applications surged 40% to the strongest weekly pace since October 2025.”
President Donald Trump posted on social media late Thursday that he would order Fannie Mae and Freddie Mac to buy $200 billion in mortgage-backed securities to drive down rates.
On that news, 30-year mortgage rates fell to levels not seen in almost three years, creeping into the high 5s before rebounding into the low 6s late in the day.
“Rates started to come down a little just before that, and part of it might be a bounce back from the holidays, even though we did adjust for the holiday in the results the week before. It’s always a noisy time,” Kan said.
“This was a real move based upon the rate drop. Spreads had been moving in even before the announcement.”
Purchase demand, while less sensitive to intraday swings, also climbed. Applications for a mortgage to buy a home rose 16% for the week and were 13% higher than a year earlier, “as lower rates and higher inventory kept potential homebuyers active in the market,” Kan said.
Even as borrowers reacted to the sudden drop, rate pressure appeared to rebuild. Mortgage rates moved higher at the start of this week, with lenders repricing on the back of firmer expectations for oil and growth.
Originators used late-2025 rate pullbacks to aggressively re-engage past clients and clean up higher-coupon production. The latest move suggests another window for that strategy, but with added headline risk: originators now face a policy environment where social media posts from the White House could trigger sharp, if short-lived, price moves.
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