Rates are down, applications and homebuying activity are up. Has the market turned a corner?
New weekly mortgage data released Wednesday may be just the early-year good news the mortgage sector was hoping for: applications surged compared with a week prior, according to the Mortgage Bankers Association (MBA), as the market suddenly sparked into life.
Overall applications across the country were 28.5% higher for the week ending January 9 on a seasonally adjusted basis, the MBA’s Market Composite Index showed, with refinance activity also soaring week over week as mortgage shoppers rushed to take advantage of a sudden drop in rates.
It’s likely too early to say whether those trends will continue in the months ahead. But an eyewatering jump in refinances from the same time last year – by 128% – and a 13% annual increase in purchase applications could augur well for the market moving forward.
Kristin O’Neil (pictured top), a senior loan officer with Open Door Lending, told Mortgage Professional America that spike in interest was also registering among brokers and the industry, with her own personal application volume about three and a half times higher in the first two weeks of the year than the same spell in 2025.
Partly responsible for that jolt in activity was a brief dip in rates below the 6% mark after President Trump revealed a plan late last week for Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds.
“We started to see momentum build late last week as rates dipped and headlines around potential mortgage bond purchases hit the market,” O’Neil said. “Even small moves toward the high-5% range tend to bring sidelined borrowers back into the conversation.”
Buyers driven by potentially ‘brief’ rate window
Rates aren’t exactly expected to plunge in the opening months of the year, and they inched back above 6% as bond yields crept higher in recent days.
But O’Neil said borrowers and hopeful homebuyers aren’t hyper-fixated on the idea of sub-6% rates anyway. “What’s driving activity isn’t confidence that rates will keep falling, but an understanding that these windows are often brief,” she explained.
“From a broker perspective, it’s about helping borrowers get positioned thoughtfully and react efficiently in a fast-moving market.”
Whether a busier spring market is on the way is anyone’s guess, but O’Neil noted a trend seen in recent years of borrower activity starting to heat up earlier in an effort to get ahead of shifts in both rate and inventory.
That could be part of the reason for the early-year uptick in refinance applications. “The goal is to make sure borrowers can capture meaningful, lasting savings and don’t strike too soon, only to go through the process again six months to a year later,” she said.
“However, I’ve had several clients who were able to lower their rate by more than a full percentage point and save hundreds of dollars per month, which makes this a very worthwhile time to explore options if the breakeven point and overall savings truly make sense.”
Enthusiasm builds elsewhere for strong 2026 market
In a Monday call with analysts after JPMorgan Chase & Co’s fourth-quarter results were revealed, the company’s chief financial officer Jeremy Barnum also pointed to an immediate jump in mortgage lending following the rate drop.
“I did actually hear that it was a pretty busy day in the home-lending business on the back of what happened in the mortgage market,” he said.
And fresh National Association of Realtors (NAR) data suggested housing market activity was picking up even before the beginning of this year.
The association said existing-home sales were up by 5.1% in December compared with the previous month, and 1.4% higher year over year.
That trend, coupled with the recent swing towards lower rates, could mark further good news for the mortgage industry.
“Existing home sales finished 2025 on a strong note,” said Nancy Vanden Houten, lead US economist at Oxford Economics, “and given the recent additional leg down in mortgage rates, we see upside risk to our forecast for sales in this year.”
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