Mortgage rates decreased ten basis points last week according to the Freddie Mac Primary Mortgage Market Survey released on January 15th. Late last week, mortgage rates dropped, driving the weekly average down to its lowest level in more than three years. The impacts are noticeable, as weekly purchase applications and refinance activity have jumped, underscoring the benefits for both buyers and current owners. It appears that housing activity is improving and poised for a solid spring sales season.
Mortgage applications increased 28.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending January 9th. “Mortgage rates dropped lower last week following the announcement of increased MBS purchases by the GSEs. Lower rates sparked an increase in refinance applications,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Compared to a holiday adjusted week, refinance applications surged 40 percent to the strongest weekly pace since October 2025. The average loan size for refinance applications was also higher, as borrowers with larger loan sizes are typically more sensitive to changes in rates.” Added Kan, “Purchase applications also jumped last week and were 13 percent ahead of last year’s pace, as lower rates and higher inventory kept potential homebuyers active in the market.”
The U.S. labor market ended 2025 on a soft note, with job creation in December less than expected, according to a report Friday from the Bureau of Labor Statistics. Nonfarm payrolls rose a seasonally adjusted 50,000 for the month, lower than the downwardly revised 56,000 in November and short of the Dow Jones estimate for 73,000. At the same time, the unemployment rate fell to 4.4%, compared with the forecast for 4.5%. The report presented a muddy view of the labor market, with companies reporting a low level of hiring but households showing employment gains. “The jobs report is a mixed bag, with both positive and negative aspects,” said Art Hogan, chief market strategist at B. Riley Wealth. “We continue to see an environment where companies are slow to hire and slow to fire. The overarching takeaway in today’s report is that there is more good news than bad in the first on-time jobs report in three months.”
The Consumer Price Index rose at an annual rate of 2.7% in the final month of 2025, in line with economists’ forecasts and unchanged from the prior month, capping a year when many Americans felt squeezed by price pressures. Inflation last month matched November’s 2.7% annual pace, signaling that prices didn’t ease further at the end of the year. Core CPI that excludes volatile food and energy prices, rose by 2.6% over the past 12 months. Food prices jumped 3.1% last month, accelerating from a 2.6% increase in November, and the highest since August. Groceries have remained a sticking point for Americans who have had to stretch their budget to afford basic staples. “Inflation remains a challenge, with core PCE inflation holding above the Federal Reserve’s 2% target for 55 months,” noted Seema Shah, chief global strategist at investment firm Principal Asset Management. Taken together, today’s inflation data and the latest jobs report, which showed a lower unemployment rate, are likely to keep the Fed on track to hold rates steady at its meeting later this month, experts say.
