The first full week of 2026 opens with a familiar dynamic in the mortgage market: incremental progress, persistent uncertainty, and selective reasons for optimism. While holiday-related data gaps often limit early-January clarity, this week’s episode of Optimal Insights offers a look at where key indicators closed out 2025 – and how lenders should be thinking about the path ahead.
Optimal Blue experts Jim Glennon and Alex Hebner unpack recent macroeconomic developments, rate movements, and geopolitical considerations. Mike Vough and Brennan O’Connell then preview the December 2025 Market Advantage data, outlining origination, secondary, and servicing trends that will matter as the industry recalibrates for the new year.
Here’s what you need to know this week.
Market Update
Despite a relatively quiet data calendar during the holidays, the mortgage market closed 2025 on a notably steady footing.
Current rate and volume conditions include:
The Optimal Blue Mortgage Market Indices (OBMMI) 30‑year fixed rate finished December near 6.14%, holding in the lower end of the sixes.
The 10‑year Treasury ended the month around 4.16%, continuing a gradual compression between Treasury yields and primary mortgage rates.
Lock activity dipped during the final holiday stretch but remained roughly 50% of normal volume, well above typical late‑December norms.
Labor Market and the Fed: “No News” Remains Good News
Labor data continues to signal equilibrium rather than stress. Initial jobless claims remained near 220,000, comfortably within the range observed through most of 2025. The unemployment rate has hovered in the mid‑4% range, and upcoming employment reports are expected to be modest but stable.
From a monetary policy perspective:
Federal Reserve voting membership rotated at year-end, a routine shift rather than a signal of directional change.
The incoming voting mix leans marginally more hawkish, though not to a degree that suggests an imminent policy recalibration.
Leadership uncertainty remains the larger variable, with future Fed appointments likely to carry more influence than current voting rotations.
For mortgage lenders, this environment reinforces the importance of planning for rate persistence rather than rapid relief.
Geopolitics: Monitoring, Not Reacting
Recent geopolitical developments – particularly in Latin America – have introduced additional variables into the global macro picture. To date, markets have reacted with restraint. Rates, equities, and spreads have shown little disruption, underscoring how embedded higher‑rate assumptions have become.
That said, geopolitical developments remain a latent risk factor. Any escalation with implications for energy markets, currency denomination, or global liquidity could quickly reenter rate conversations.
Market Advantage Preview: December 2025 Data
The most actionable insights this week come from the December Market Advantage preview, offering a snapshot of how mortgage production and capital markets behavior closed out the year.
Origination Trends
December delivered an unexpected but constructive outcome:
Total origination volume increased 2% month over month and rose 30% year over year.
Refinance activity led the charge, with: Rate‑term refinances up 13% from November and 170% year over year, admittedly off a small baseline. Cash‑out refinances up 35% year over year.
Purchase activity remained subdued but stable: Down just 1% month over month in December. Up 7% year over year, indicating gradual improvement rather than a full recovery.
Rate and Product Mix Observations
Mortgage rates ended December largely flat, despite a rise in Treasury yields.
Spreads between the 10‑year Treasury and primary mortgage rates compressed back near 200 basis points, reversing November’s widening.
Non‑QM volume continued its steady ascent, reaching just over 9% market share and positioning itself as one of the most consequential growth categories heading into 2026.
Secondary and Capital Markets: Incremental Improvement
Best‑effort‑to‑mandatory spreads improved across most products, modestly enhancing execution economics.
Servicing valuations strengthened, with multiples rising alongside modest rate stability.
Bid depth increased, with an average of 12 investors participating in loan sales – an atypical holiday‑season result.
Practical Takeaways for Mortgage Professionals
Plan for persistence. Rate volatility may narrow, but “higher for longer” remains the prevailing base case.
Refinance strategies matter. Rate‑term and cash‑out activity continue to offer selective opportunities.
Non‑QM deserves attention. Early positioning in this segment may provide meaningful volume leverage.
Execution optimization is critical. Incremental gains in secondary spreads and servicing values can materially affect profitability.
For a deeper exploration of these trends and a preview of the December Market Advantage data, listen to the full episode of Optimal Insights. Available on all major podcast platforms: https://optimal-insights.captivate.fm/listen
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The views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views or positions of Optimal Blue, LLC.