Stable Mortgage Rates Anchor Growth Through 2026 Amid Moderate Inflation

Freddie Mac's latest Primary Mortgage Market Survey shows the 30-year fixed-rate mortgage averaged 6.23% as of November 26, 2025, down slightly from 6.26% the week before. The 15-year fixed rate also fell to 5.51% from 5.54%. This weekly dip adds to sustained downward pressure on mortgage rates since October 2025, despite a recent temporary rise to 6.32% in late November amid weaker labor data. Pending home sales reached their highest level since November 2024, signaling resilient buyer demand even as rates remain elevated compared to historical norms.

Mortgage applications dipped 1.4% week-over-week in late November, reflecting short-term volatility. However, refinance activity showed strong underlying momentum, expanding 109% year-over-year even as weekly applications declined 4%. Purchase applications rose 3% seasonally adjusted that week, though unadjusted numbers fell 32%. Refinancing accounted for 53% of all applications, highlighting its dominant role in current market activity despite higher rates. The adjustable-rate mortgage share grew to 8.0% of applications, suggesting some borrowers are seeking lower initial payments.

Macroeconomic Anchors: Treasury Yields and Fed Guidance

According to recent data, Treasury yields slipped, pulling mortgage rates down to 6.32% as weak labor data and falling consumer confidence weighed on markets. That 30-year mortgage rate drop mirrored Treasury movements, suggesting rates have found some stability despite broader economic uncertainty. However, the stability appears fragile: even as applications dipped 1.4% week-over-week, the purchase index only rose 3% seasonally adjusted, while unadjusted purchase applications fell sharply by 32%. This disconnect hints at underlying weakness in the housing market.

Inflation remains a key anchor point for the Fed. September's CPI showed annual inflation at 3.0%, matching core inflation at 3.0%, but beneath the surface, shelter costs rose 3.6% annually and medical care climbed 3.3% according to BLS data. While gasoline prices gave inflation a boost with a 4.1% monthly surge, the overall picture isn't yet comfortably below the Fed's 2% target. This persistence, especially in sticky categories like shelter, gives the central bank reason to stay watchful.

The Federal Reserve's next major information catalyst arrives in December. The December 9-10 FOMC meeting will release updated economic projections and policy guidance, offering clearer signals on the central bank's path according to official FOMC calendar. Until then, policymakers have limited data to anchor expectations. Markets will watch carefully for hints on whether the weak labor data and moderating yields reflect a broader slowdown or temporary turbulence. The December projections will likely dominate investor thinking for the coming months, especially given lingering tariff uncertainty and elevated shelter costs.

For now, mortgage rate stability rests on shifting Treasury yields and ambiguous labor signals. Investors should note that the September inflation print, while at target levels for headline and core, reveals ongoing pressure in key consumption categories. The December FOMC meeting remains the crucial next step in understanding the Fed's stance-and potential risks to market stability.

Growth Dynamics: Purchase vs. Refinance Penetration

Mortgage applications show contrasting dynamics between home purchases and refinancing. Purchase demand remains volatile but resilient. While unadjusted weekly purchase applications tumbled 32% in late November 2025, the seasonally adjusted index still rose 3% as buyers react to rate declines that brought the 30-year fixed mortgage to 6.32% according to MBA survey data. This adaptation is evident in the adjustable-rate mortgage share growing to 8.0% of applications, as buyers seek alternatives amid higher borrowing costs.

Refinance activity demonstrates stronger underlying momentum despite short-term weakness. Applications dropped 4% week-over-week in November 2025 but continued a remarkable 109% annual surge. This growth expanded the refinance pool to represent 53% of total applications. The persistence suggests a broadening borrower base, though rate volatility and weaker labor data create ongoing headwinds.

For lenders, the purchase-refinance dichotomy implies divergent risk management needs. Purchase loans carry rate sensitivity and affordability constraints, while refinances face competition and prepayment uncertainty. The 8% ARM share indicates borrower willingness to accept rate resets for current savings, but this adds complexity to portfolio risk modeling as policymakers navigate inflation pressures.

The 109% YoY refinance growth provides tangible near-term revenue, yet the 4% weekly dip reminds us that borrower behavior remains reactive to economic signals. Mortgage originators should monitor whether purchase applications can sustain adjusted growth above the seasonal average, especially as ARM adoption may accelerate if rates remain elevated.

Risk Assessment: Threats to Growth Stability

Despite recent stability in core lending metrics, three key frictions threaten sustained growth momentum. Shelter inflation remains stubbornly elevated at 3.6% YoY, per September 2025 CPI data. This persistent cost driver pressures household budgets and could prolong high borrowing costs, dampening consumer spending and business investment. While other core components like medical care showed moderate gains, shelter's stickiness suggests inflationary inertia even as overall energy prices cooled.

Lender profitability volatility also raises concerns. Mortgage bankers swung from a $28 per-loan loss in Q1 2025 to a $950 profit in Q2 according to MBA research, but this rebound remains fragile. The swing highlights sector vulnerability to small shifts in loan volumes or interest rates. With 2024's average profit at $443 per loan still below pre-pandemic levels, thin margins leave little room for unexpected shocks like rising defaults or regulatory changes.

Labor market deterioration compounds these risks. Mortgage applications fell 1.4% weekly in late November 2025 amid declining consumer confidence and weaker labor data according to MBA survey data. The 30-year fixed rate dropped to 6.32%, yet purchase applications still fell 32% unadjusted, signaling reduced buyer activity. Refinance demand weakened 4% week-over-week despite a strong annual increase, reflecting constrained household equity and tighter credit conditions. These trends suggest weakening household financial health, which could trigger higher delinquencies if unemployment rises.

Taken together, these frictions-sticky shelter inflation, volatile lender earnings, and labor market fragility-create headwinds that could quickly erode growth momentum if not addressed.