Derek McGowan argues January 2026 could be a turning point for mortgage rates: recent labor-market reports (November unemployment at 4.6% vs. 4.4% expected, and continued jobless claims above 1.9 million) suggest weakness that—if confirmed by January data—could push mortgage rates sharply lower. He notes potential data distortions from government shutdowns and holiday-season reporting, urges buyers to start the mortgage/pre-approval process now, and frames January as the validation point that could cause markets to react quickly.
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What if I told you January could be a turning point for mortgage rate? I get it. Why would mortgage rates just drop in January? What's even happening? Well, here's what's happening. November's unemployment report showed the highest level since 2021 at 4.6%, way over the expected 4.4%. And remember what happened in 2021. That was when Covid was running rampages into the economy. And continued jobless claims are as high as they've been since COVID days. They're back to over 1.9 million people across the country are now repeating on the unemployment report. So they still can't find a job. Now normally these of reports would have already skyrocketed, mortgage rates lower, but there were government shutdowns and the holidays upon us. So many of the traders in the market think that these reports might be a little bit skewed because we're not getting the full set of data. With government layoffs maybe increasing unemployment a bit and then people take time off for the holidays. That's what makes January so important. If January's economic reports also come in weak, then it validates November, December and January. So the mortgage market could react and react hard though if January's reports are lower, look for mortgage rates to really kind of snowball themselves even lower. And if you're a buyer on the sidelines waiting for mortgage rates to drop, you don't want to wait until that moment takes place because by that time it's too late. The people that were already pre approved are jumping back into the market making offers. So you want to start the process in advance. So reach out if you're looking to get the best deal on your new home.
