Insights and Analysis: Mortgage and Real Estate Capital Markets Update with Jeff Rosato, SVP of Capital Markets at Nationwide Mortgage Bankers.
Key Takeaways:
“Mortgage rates remain steady, with the 30-year fixed rate at 6.21% and limited movement expected through year-end due to light holiday trading. Softer inflation and a slowing labor market have increased the likelihood of potential Fed rate cuts in early 2026, though rates are expected to remain unchanged in January. Markets should stay quiet this week, with locks recommended by Tuesday evening as pricing turns more conservative midweek.”
Let’s take a closer look at what’s driving this week’s rate movements and economic sentiment.
“If economic growth continues to slow and labor market weakness persists into early 2026, expectations may shift toward more rate cuts.”
Rate Trends and Market Drivers
The Freddie Mac average 30 year fixed rate is at 6.21% as of last Thursday and was down by 1 basis point compared to the prior week. That puts the max APR this week for 30 year fixed rate loans at roughly 7.71% (6.21 + 1.50). The 10 Year Treasury yield closed last week at 4.15% which was down by 4 basis points on the week.
Rates have been in a very tight range for the last few weeks and should remain relatively flat through the end of the year. There are two holiday shortened weeks left for the month and trading volume will be light. The economic calendar will also be very abbreviated through the end of the year. The Federal Reserve remains data dependent and will continue to weigh high inflation against a weakening labor market. The Fed still sees some upside risk in inflation although last week the November CPI surprised to the downside and both headline and core inflation fell into the 2.5% percent range. Easing inflation concerns strengthen the case for FOMC rate cuts starting in March or June of next year.
Economic Data Recap
The U.S. labor market has also shown signs that the economy is slowing with recent payroll reports showing negative gains in October, less than expected gains in November, and a slowly increasing unemployment rate. This week the only major data release will be the delayed Q3 GDP report on Tuesday. If economic growth continues to show signs of slowing and weak labor momentum persists into early 2026, then the expectation for 2026 may shift to more rate cuts rather than fewer. Currently the expectation is for the Fed to hold rates steady in January, but there is about a 50% chance for a .25% cut at the March meeting. For now, policymakers are content to wait for clearer signals from both inflation and employment data before making any policy or strategy changes.
So far today MBS prices are generally flat compared to where they closed on Friday and the 10 Year Treasury is up 1 basis point to 4.16%. The markets should remain relatively quiet this week. Please try to get your locks in by Tuesday night as rate sheets will be priced conservatively starting on Wednesday.
Have a great week!
