Mortgage rates increased three basis points last week according to the Freddie Mac Primary Mortgage Market Survey released on January 22nd. 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.
Mortgage applications increased 14.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 16th. “Mortgage rates declined further last week, driving another big week for refinance applications, which saw the strongest level of activity since September 2025. The 30-year fixed rate was at its lowest rate since September 2024,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “These lower rates prompted greater refinance activity from conventional and VA refinance borrowers, with increases of 29 percent and 26 percent, respectively. Refinance applications accounted for more than 60 percent of applications, and the average loan size also moved higher.” Added Kan, “Purchase applications were also up over the week, fueled by an 8 percent increase in conventional loan activity, and were almost 18 percent higher than last year.”
Inflation drifted slightly further from the Federal Reserve’s target in November though in line with expectations, according to the central bank’s preferred gauge released Thursday. The personal consumption expenditures price index, a Commerce Department measure the central bank uses as its main forecasting tool, showed inflation at 2.8% for the month. In addition to the inflation figures, the report showed personal income went up 0.1% in October and 0.3% in November and personal consumption expenditures, a proxy for consumer spending, rose 0.5% in both months. “The consumer continues to drive the U.S economy, with today’s data pointing to another strong gain in spending. This resilience comes despite last year’s slowdown in the labor market, and still elevated inflation, both of which have weighed on real incomes,” said James McCann, senior economist for investment strategy at Edward Jones. “Today’s data should reassure the Fed that the economy remains on a solid footing, despite a cooler labor market.”
The U.S. economy grew at a faster pace than expected in the third quarter, according to the Commerce Department’s estimate. The Bureau of Economic Analysis on Thursday released its final reading of third quarter GDP, which showed the economy grew at an annualized rate of 4.4% in the three-month period including July, August and September. “Compared to the second quarter, the acceleration in real GDP in the third quarter reflected upturns in investment, exports, and government spending, as well as an acceleration in consumer spending. Imports decreased less in the third quarter than in the second,” the BEA said. EY-Parthenon chief economist Gregory Daco said that the strong GDP reading “was driven by resilient consumer spending, robust equipment and AI-related investment, a sizable boost from net international trade and a rebound in federal government outlays. The U.S. economy is neither overheating nor stalling, it is adjusting” to what Daco called an “unusually intense set of crosscurrents.”
