Welcome to my January newsletter, with a look at where mortgage rates stand, how yesterday’s Fannie Mae/Freddie Mac announcement could push rates lower, and how the Los Angeles market is setting up as we head into 2026.
Mortgage Rate Update & Fed Outlook
Mortgage Rates
Mortgage rates have settled into a more comfortable and, importantly, more predictable range. Conforming fixed-rate loans in Los Angeles are generally sitting in the mid to high 5’s to just under 6% range, with jumbo fixed loans in a similar range for well-qualified borrowers. Adjustable-rate mortgages (ARMs) continue to make sense for clients who want flexibility and expect to refinance again if rates drift lower later this year.
Here is a snapshot of where many of our top-tier local products are pricing today:
• 5.125% on 7YR jumbo ARMs up to $5M with full income documentation.
• 5.375% on 10YR jumbo ARMs up to $5M with verified income documentation.
• Bank statement loans typically range from the mid to high 6’s, depending on credit profile and loan-to-value; these are designed for self-employed borrowers who cannot easily document income with tax returns.
New Fannie/Freddie Program & Why It Matters
The big news yesterday was the administration’s directive for Fannie Mae and Freddie Mac to buy up to $200 billion in mortgage‑backed securities (MBS). By boosting demand for MBS, this move is designed to compress the spread between mortgage rates and Treasury yields, which is essentially the “markup” that determines what borrowers pay.
Early commentary from analysts suggests this program could nudge mortgage rates lower by roughly 0.10% to 0.25%, with some estimates a bit higher if the full purchasing authority is used.
In practical terms, this initiative may give lenders room to sharpen pricing on both conforming and jumbo products as MBS spreads tighten. It also reinforces the idea that today’s market should be approached with strategy rather than fear. There is no need to “call the exact bottom,” but there is a real opportunity to lock in more affordable long‑term financing over the coming months.
The Federal Reserve’s January meeting carries low odds of a rate cut (~15%), following three 2025 reductions. Chair Powell’s January 28th press conference will clarify the Fed’s read on inflation, jobs stability, and today’s Fannie/Freddie MBS program. Any dovish signals could boost mortgage rate declines.
Jobs Report
The December U.S. jobs report released yesterday shows payrolls increasing by 50,000, pointing to a labor market that is cooling but not cracking. The unemployment rate held at 4.4%, with 7.5 million people unemployed, essentially unchanged from November in percentage terms.
Average hourly earnings rose 0.3% in December and 3.8% over the past year, consistent with gradually easing inflation rather than re‑accelerating price pressure.
This “slow‑cooling” profile is exactly what policymakers want to see: enough strength to avoid a hard landing, but not so much heat that it reignites inflation and pushes rates higher again.
Local Activity & Recent Transactions
Local Activity
The latest available data for Los Angeles show a market defined by stability rather than drama. Redfin reports a citywide median sales price around the $1.0 million mark, up 2.5% year‑over‑year.
Inventory has improved modestly, in line with national increases of more than 10%, giving buyers more choice even as overall sales volumes remain subdued. Median days on market have lengthened, but well‑priced, well‑located homes in premium neighborhoods continue to draw strong interest and can still move quickly when they are positioned correctly.
Recent Closed Loans
FEATURED TRANSACTION
New Home Purchase | Greater Los Angeles | $27.7M
70% LTV Financing
Loan amount – $19,000,000
7/1 ARM
5.55% interest rate | 5.65% APR
Very few major banks will execute a transaction of this size. Cohen Financial Group leveraged an exclusive private banking relationship the public does not have access to, allowing us to secure financing and a 30-day close.
Cash Out Refinance | West LA | $3M
75% LTV Financing
Bank Statement Loan
6.75% interest rate | 6.85% APR
We completed a $3M all-cash-out refinance using only bank statements with no tax returns required. The loan closed in just three weeks, providing the most cost-effective financing solution to support the borrower’s company expansion.
Multi-family purchase | Hermosa Beach | $4.6M
Two Part Loan
1. Refinance of borrowers home
$2M Cash-out
5.375% interest rate | 5.475% APR
2. $2.6M Bridge financing from a mortgage fund
We structured two loans for a well-qualified physician to acquire a currently uninhabitable apartment building in Hermosa Beach, enabling the purchase without the borrower putting any personal funds into the deal.
New Home Purchase | West LA | $2.375M
90% LTV financing
10/1 ARM (Doctor program loan)
5.67% interest rate | 5.77% APR
High-leverage financing at these rates with no PMI is exceptionally rare. This is where our advantage shows.
Key U.S. Housing Reports to Watch in January
January 9 – Building Permits and Housing Starts
January 13 – New Home Sales
January 14 – Existing Home Sales
January 21 – Pending Home Sales
January 28 – Fed Interest Rate Decision
As 2026 gets underway, thank you for your continued confidence in Cohen Financial Group. Yesterday’s Fannie/Freddie announcement, combined with a cooler but steady labor market, sets up a constructive backdrop for rates and for thoughtful planning around purchases, refinances, and investment opportunities.
For customized rate quotes, scenario analysis, or a strategic conversation about how these developments affect your situation, please reach out any time.
Warm regards,
Mark Cohen