Mortgage rates decreased one basis-point last week according to the Freddie Mac Primary Mortgage Market Survey released on December 18th. The average 30-year fixed-rate mortgage has remained within a narrow 10-basis point range over the last two months. With rates down half a percent over last year, purchase applications are 10% above the same time one year ago.
Mortgage applications decreased 3.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending December 12, 2025. “Mortgage rates inched up last week following the FOMC meeting, as investors interpreted the comments to signal that we are near the end of this rate cutting cycle. As a result, mortgage applications declined slightly,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Purchase application volume typically drops off quickly at the end of the year, and this shifts the mix of the business, with the refinance share reaching 59 percent last week, the highest level since September. However, refinance activity has remained mostly the same for the past month as rates continue to hold at around the same narrow range.”
The pace of U.S. job growth rebounded in November after a drop in the prior month, but the unemployment rate increased to 4.6%, indicating the labor market continues to show signs of softening, while expectations the Federal Reserve was unlikely to cut rates in January remained largely unchanged. Nonfarm payrolls increased by 64,000 jobs in November, after a drop of 105,000 in October as more than 150,000 federal employees who took deferred buyouts departed, Labor Department data showed on Tuesday. Economists polled by Reuters had forecasted 50,000 jobs added last month. The unemployment rate was 4.4% in September. According to Kay Haigh, Global Co-Head of Fixed Income and Liquidity Solutions at Godman Sachs Asset Management, “The Fed is unlikely to put much weight on today’s report given data disruptions. Chair Powell commented last week that the report would likely be affected by shutdown-related distortions, making it a less reliable gauge of the labor market’s health than usual.”
Consumer sentiment has fallen and layoffs are rising, yet U.S. shoppers have fueled solid retail sales growth and turned out in large numbers during the five-day stretch from Thanksgiving Day through Cyber Monday. Low unemployment, spending by high-income households, and consumers’ willingness to splurge during the holiday season have helped to prop up spending. Yet there are signs of strain, with consumers across incomes turning to value-oriented retailers such as Walmart and T.J. Maxx. Across the country, nearly 203 million U.S. shoppers hit retailers’ stores and websites during the five-day stretch from Thanksgiving Day through Cyber Monday, the highest turnout in at least nine years, according to the National Retail Federation, which surveys shoppers to calculate the annual estimate.
