Each month, we bring you insights from one of the best in the business — Zack Diener of Barrett Financial Group, LLC — to help you stay informed and make confident, well-timed decisions in today’s ever-changing mortgage landscape.
The Historic Week That Changed Everything
If you weren’t paying attention to the mortgage market in early January, you missed one of the most dramatic weeks in recent history. Within a span of 72 hours, we saw weak jobs data, a presidential directive to purchase $200 billion in mortgage bonds, and rates plunging to their lowest levels since September 2022. Let me break down what happened and what it means for borrowers heading into the new year.
The $200 Billion Bombshell
On Thursday, January 8th, President Trump directed Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds, a move he positioned as his effort to bring down housing costs ahead of November’s midterm elections. The announcement sent immediate shockwaves through financial markets.
The surprise announcement juiced the underlying MBS (mortgage-backed securities) market Thursday afternoon, but traders took the surge to the next level Friday morning. MBS had improved so much by
Friday morning that the average lender released their best rate sheet since February 2, 2023 – the lowest level since September 2022.
According to Mortgage News Daily’s daily survey of lenders, 30-year fixed mortgage rates dropped 22 basis points Friday to 5.99% – the lowest since September 2022. That’s nearly a quarter-point drop in a single day.
The Caveats and Reality Check
Before you get too excited, there are important limitations to understand:
The Impact May Be Temporary: Redfin economist Chen Zhao estimates the move will bring mortgage rates down 10 to 15 basis points, meaning rates may settle around 6.0-6.15% rather than staying at the 5.99% low we briefly touched. MBS experienced significant volatility throughout Friday, and at least one lender already bumped rates back up by afternoon.
It’s Smaller Than It Sounds: The Fed’s pandemic-era quantitative easing bought $491 billion in MBS and $1.57 trillion in Treasurys in just the first 10 weeks. By comparison, $200 billion spread over months or even a year is relatively modest. BTIG analyst Eric Hagen notes the Fed was buying $40 billion per month during the pandemic to achieve dramatic rate drops.
Regulatory Limits Exist: Under the Preferred Stock Purchase Agreement, each GSE’s retained portfolio is capped at $250 billion, with an additional $225 billion limit imposed by FHFA. Fannie and Freddie were already at $233.6 billion in combined MBS holdings as of October, so there’s only so much room to grow.
The Jobs Report That Started It All
Friday’s dramatic rate drop wasn’t just about the bond purchase announcement. The December jobs report, released Friday morning, showed continued labor market weakness:
- Only 50,000 jobs added in December, below the 55,000 forecast
- Unemployment fell to 4.4% from a revised 4.5% in November
- October and November combined were revised down by 76,000 jobs
With December’s estimated job gains, the U.S. economy added just 584,000 jobs in all of 2025 – outside of recession years, that’s the weakest annual job growth since 2003.
The labor market picture is concerning but nuanced. Some of the job losses reflect a shift from low-wage to high-wage workers, with management losing jobs faster than front-line workers. Entry-level workers took it on the chin in 2025, though this may reverse somewhat in January as minimum wages rose in 19 states for an estimated 8.3 million workers.
Where Rates Stand Today
Currently, rates are averaging 6.04% for conventional 30-year fixed loans according to Mortgage News Daily’s daily survey of lenders. Trading levels in the bond market directly impact the rates that mortgage lenders can offer, but bonds aren’t the only input for rates.
Those other inputs can make for days like today where bonds are noticeably better while mortgage rates refuse to follow. One explanation: mortgage lenders are quickly becoming too busy to handle more volume. When refi applications surge, lenders sometimes hold rates steady to manage their pipeline capacity.
Local Hawaii Market Update
The Hawaii market is showing encouraging signs heading into 2026. With the average 30-year mortgage rate recently falling to 6.15%, local mortgage lenders are noticing more tangible homebuyer optimism in the market, despite supply issues.
Oahu experienced positive momentum in the second half of 2025, with sales rising 16% for single-family homes and 9% for condos compared to the first half of the year. That momentum ended 2025 on a strong note: single-family home sales surged 18.4% in December to 270 homes from 228 in December 2024, while the median sale price rose 4.3% to $1,100,000.
Looking ahead, Hawaii real estate brokerage firm locations expect moderate increases in sales volume and median prices for 2026, noting that “mortgage rates are trending lower and showing more stability, while strong sales and competitive market conditions point to renewed buyer demand”.
Here in Hawaii, local banks and Hawaii-based credit unions are reflecting these improved national rate trends. The expertise local lenders bring to island real estate transactions – understanding leasehold properties, rural financing, and Hawaii-specific nuances – becomes especially valuable when rate opportunities like this present themselves.
As a local mortgage brokerage with longstanding partnerships with both local and mainland institutions, I’m positioned to help clients take advantage of these favorable rate windows when they appear, while navigating the inevitable volatility that comes with unprecedented policy interventions.
What This Means for Borrowers
The Opportunity: We’re experiencing the best rate environment since late 2022. Whether rates stay at current levels or tick back up slightly, we’re still dramatically better off than the 7%+ rates that characterized much of 2024 and early 2025.
The Urgency: Fannie and Freddie have already been increasing their MBS purchases through late 2025, and this announcement accelerates that trend. However, once they hit their regulatory caps or complete the $200 billion purchase program, this artificial support for rates will disappear.
The Volatility: The caveat is that MBS experienced significant volatility throughout the day, and that volatility is likely to continue. Rates could bounce around as markets digest the full implications of this policy intervention.
The Fed Factor: The Fed needs to see the dust settle on data disruptions from the government shutdown before cutting again, with economists now expecting only three rate cuts in 2026. Don’t count on the Fed to push rates dramatically lower – they’re focused on the housing supply shortage, not bond-buying to manipulate rates.
The Bottom Line
We’re in uncharted territory. The executive branch directing $200 billion in mortgage bond purchases is unprecedented outside of financial crises, and signals a broader assertion of executive authority, effectively placing the White House in a role traditionally reserved for the Federal Reserve.
For borrowers, the practical reality is simple: rates around 6% represent an exceptional opportunity compared to where we’ve been for the past two years. The combination of weak labor market data and this bond purchase program has created a window that may not last.
If you’ve been waiting for better conditions, this is the moment. The question isn’t whether rates will drop further – it’s whether you’re ready to act while this opportunity exists. Markets can reverse quickly, as we’ve learned repeatedly over the past year, and this policy-driven rally could fade just as fast as it appeared.
Mortgage insights provided by
Zack Diener – Senior Mortgage Broker
Barrett Financial Group LLC
NMLS 470413 / 181106
808-349-3777
Connect with Zack
Barrett Financial Group, LLC | Corp NMLS #181106
275 E Rivulon Blvd, Suite 200, Gilbert, AZ 85297
275 E Rivulon Blvd, Suite 200, Gilbert, AZ 85297
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