Will the U.S. mortgage market get its groove back in 2026?

The coming of a new year often coincides with hopes for a fresh start. Nowhere is that truer than in the U.S. mortgage market, which has just wrapped up its third year of lackluster borrower activity after 525 basis points (bps) of inflation-busting rate hikes in 2022 and 2023 sapped demand for new mortgage loans and refinancing.

Despite 175bps in Federal Reserve rate cuts since September 2024, borrower activity remains anemic, with many pinning their hopes on 2026 being the year the market revives.

Those hopes received a shot in the arm earlier this month, when the Federal Reserve disclosed it had been served with subpoenas by the Department of Justice (DOJ). Some observers interpreted the action as a bullish signal for additional rate cuts in 2026.

On Polymarket’s prediction platform, the likelihood for three 25bp cuts leapt from 18% to 27% following the DOJ move - making it the most nominated outcome. In comparison, Treasury futures are pricing in expectations for nearly two 25bp cuts, and 30-year mortgage futures are pricing in rates in the high 5% range by the middle of the year.

While additional cuts could help reignite the mortgage market, current rates are still some distance above levels that would bring a large proportion of borrowers into play for a home move or a refinancing. ICE Mortgage Technology was tracking more than 55 million residential mortgages outstanding in the U.S. as of the end of 2025, with a median interest rate of 3.875%.

After the White House instructed Fannie Mae and Freddie Mac to buy $200 billion of mortgage-backed securities on January 8, 30-year mortgage rates fell to 6.04%, according to the ICE U.S. Conforming 30-year Fixed Rate Index. That was their lowest level since early 2023, with the spread between 10-year U.S. Treasury yields and 30-year mortgage rates falling to 185bps the following day, the tightest spread since January 2022.

The dip to 6.04% pushed the number of borrowers in the range for a mortgage refinancing to 4.8 million, the highest level since early 2022. This is all very positive news, but nevertheless, those 4.8 million loans represent less than 9% of the 55 million mortgages outstanding nationwide at the end of 2025.

Geopolitical concerns are another reason to moderate expectations that 2026 will be the year the market jolts back to life. As global tensions rose over the status of Greenland in late January, 10-year Treasury yields approached 4.3%, their highest level since August. This caused 30-year mortgage rates to tick up to 6.14% on January 20, pulling the number of in-the-money mortgages back down to 3.9 million.

Then there is the question of borrower sentiment. ICE conducted its 2026 Borrower Insights Survey in November and December 2025. One of the most significant findings was that sentiment among U.S. homeowners and borrowers about entering a new mortgage loan remains bearish - and has, in fact, deteriorated over the past 12 months.

62% of the 1,000 homeowner respondents stated that they have no plans to move home any time soon. That number is higher than the 55% who had no plans to move in last year’s Survey. The research found similarly tepid sentiment across different types of mortgage loans: 54% of respondents have no plans to refinance, take out a home equity line of credit or draw on home equity this year, up from 43% last year.

When these responses are considered against the backdrop of the 75-100bps in rate cuts between the fielding of the 2025 and 2026 Surveys, the deepening reluctance to enter new loans suggests that other factors (high home prices, insurance costs, etc.) are at play that falling interest rates cannot ameliorate in isolation.

These issues and more will be discussed in depth at ICE Experience in Las Vegas on March 16-18, where we will share the complete findings from the 2026 ICE Borrower Insights Survey and explore the broader implications for the U.S. mortgage market.

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