Mortgage Rates and GSES

Mortgage rates and refinancing have attracted attention from the Peak Investment Committee recently.  This is in light of the announcement that government-backed mortgage finance companies Fannie Mae and Freddie Mac might buy $200 billion in mortgage bonds. This move has drawn attention from both borrowers and bond managers—and it raises important questions: Where do mortgage rates and refinancing opportunities stand today?

As seen on the chart below, the average 30-year mortgage rate was 6.06% as of January 15th, 2026, down from the 2025 high of 7.22%. Roughly half of this decline stemmed from a drop in the 10-year Treasury Bond yield, the benchmark underpinning mortgage pricing. The remaining improvement came from tighter “spreads” between mortgages and the 10-year Treasury.

A decline of more than one full percentage point is meaningful. For borrowers, this can translate into substantial long-term interest savings. However, it’s important to remember that a significant portion of this improvement is tied to broader economic forces affecting Treasury yields. Because of this, there may be limits to how low mortgage rates can fall over the near term—and how long they can remain at current levels.

Refinancing activity has indeed picked up, according to data from the Mortgage Bankers Association seen below. However, activity remains well below the elevated levels seen during the COVID-era refinancing boom. Recent data also shows “micro-surges” when mortgage rates fall quickly, suggesting that some homeowners are acting opportunistically when rates drop enough to make a refinance appealing. That said, a more prolonged decline in rates would likely be needed to spark a broader wave of refinancing.

https://www.mortgagenewsdaily.com/data/mortgage-applications

If you’re considering refinancing, it’s helpful to approach the decision through the lens of your personal financial situation rather than trying to predict short-term rate movements. Here are several key questions to guide your thinking:

• How much will a refinance lower your current mortgage rate?
• What are the closing costs of a refinancing, and how long would you need to stay in the home to break even?
• Will changes to mortgage insurance, points, or loan structure affect the true cost of refinancing?

Refinancing can create meaningful long-term financial benefits, especially for borrowers who locked in higher rates in recent years. The choice of whether and when to refinance is highly dependent on individual circumstance rather than trying to time the rates market. The direct impact of government policy actions like the mortgage bond purchase program are unpredictable and may or may not lead to reductions in mortgage costs. 

If you’re evaluating your own mortgage options, consider revisiting the numbers with a professional. A clear understanding of costs, savings, and your long-term plans can help you decide whether refinancing strengthens your overall financial strategy.