Mortgage
purchase
application
data

The
last
three
years
have
shown
that
when

mortgage
rates
fall
below
6.64%
and
head
toward
6%,
purchase
application
data
improves,
especially
week-to-week.
In
the
past
few
years,
we
weren’t
able
to
hold
rates
down
near
6%
long
enough
to
get
real
traction.
This
year,
we
have
been
able
to
hold
rates
below
6.64%
for
18
weeks,
which
has
been
the
best
18
weeks
of
the
year.
Below
is
what
the
data
has
shown
us
for
the
last
18
weeks: 

• 11
  positive
  week-to-week
  prints
• 7
  negative
  week-to-week
  prints
• 18
  weeks
  of
  double-digit
  year-over-year
  growth

As
you
can
see
in
the
chart
below,
we
are
now
near
a
three-year
high
in
mortgage
purchase
application
data
in
December
of
2025.

Below
is
the
data
for
the
entire
year.
Earlier
in
the
year,
when
mortgage
rates
were
above
6.64%
we
really
didn’t
have
a
positive
flow
of
week-to-week
data;
it
was
choppy.
But
now,
with
rates
under
6.64%
and
near
6%,
the
data
has
improved.

• 23
  positive
  readings
• 18
  negative
  readings
• 6
  flat
  prints
• 44
  straight
  weeks
  of
  positive
  year-over-year
  data
• 31
  consecutive
  weeks
  of
  double-digit
  growth
  year
  over
  year

We
can
also
see
it
in
our
total
pending
home
sales
data,
as
demand
is
at
a
multi-year
high
this
last
week.

Mortgage
rates,
spreads
and
the
10-year
yield

In
my

2025
forecast,
I
anticipated
the
following
ranges:

• Mortgage
  rates
  between
  5.75%
  and
  7.25%
• The
  10-year
  yield
  fluctuating
  between
  3.80%
  and
  4.70%

Mortgage
spreads
mattered
so
much
this
year
because
the
10-year
yield,
unlike
last
year,
never
got
toward
3.60%.
We
have
had
a
hard
time
staying
below
4%
for
any
extended
period,
as
the
Fed
remains
modestly
restrictive
and
the
growth
rate
of
inflation
remains
above
the
Fed’s
target.
As
you
can
see
in
the
chart
of
the
10-year
yield
below,
we
haven’t
spent
much
time
under
4%
this
year.
However,
mortgage
rates
are
still
near
6%
today.

Mortgage
spreads

For
2025,
I
was
looking
for
an
improvement
in
mortgage
spreads
of
0.27%-0.41%,
using
a
2.54%
average
for
2024,
and
that
has
been
achieved.
Historically,
mortgage
spreads
have
ranged
between
1.60%
and
1.80%.
If
today’s
spreads
were
as
bad
as
they
were
at
the
peak
of
2023,
mortgage
rates
would
be
roughly
0.99%
higher,
at
7.26%.
Conversely,
if
the
spreads
returned
to
their
normal
range,
mortgage
rates
would
be
0.51%
to
0.31%
lower
than
today’s
level,
meaning
they
would
be
5.76%
to
5.96%. 

Healthy
inventory
growth
and
slower
price
growth
in
2025

On
top
of
the
positive
spread
news,
active

housing
inventory
has
grown
year
over
year
and
price
growth
has
slowed
down
in
2025. 
We
are
at
the
stage
of
the
year
when
we
see
the
seasonal
decline
in
inventory.
Still,
the
best
part
of
2025
has
been
that
we
found
balance
in
housing
inventory
again
and
we
no
longer
have
the

savagely
unhealthy
active
inventory
data.
The
percentage
of
inventory
growth
has
been
cut
in
half,
from
33%
to
15.26%
this
year,
but
this
doesn’t
change
the
story
of
solid
year-over-year
inventory
growth,
as
you
can
see
in
the
chart
below.

As
inventory
growth
has
stayed
positive,
the
price-cut
percentage
has
remained
higher
this
year
than
last,
indicating
buyers
are
getting
better
deals
this
year,
as
the
chart
below
shows.

The
week
ahead:
Fed
meeting

We
have
a
ton
of
economic
data
coming
in
the
week
ahead,
as
the
government
is
back
at
work
and
getting
back
in
the
swing
of
releasing
economic
data,
but
the
big
event
is
the
Fed
meeting
on
Wednesday.
Sarah
and
I
will
preview
the
Fed’s
meeting
on
Monday’s
episode
of
the

HousingWire
podcast. 

The
Fed
is
expected
to
cut
rates
this
week,
but
I
believe
Jerome
Powell
will
be
very
hawkish
in
his
statements
and
lay
the
groundwork
for
a
higher
bar
to
cut
rates
in
2026.
Now
this
will
likely
be
Powell’s
last
Fed
press
event
before
President
Trump
announces
the
next
Fed
chairman
although
Powell
holds
his
position
until
May
of
2026.
Regardless
of
who
the
next
Fed
chair
is,
they
won’t
have
the
hawkish
tone
that
Powell
has
recently
taken.

One
thing
is
for
sure:
with
the
rate
cuts
that
began
in
2024
and
better
mortgage
spreads,
the
mortgage
market
in
2026
has
the
best
potential
to
stay
near
6%
longer
than
anything
we’ve
seen
in
the
past
few
years.