Will the Fed Still Cut Rates in 2026? What the Strong January Jobs Report Means for Your Mortgage

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Today's topic: the jobs report

Welcome to Mortgage Mom Radio. I'm Debbie Marcoux, the Mortgage Mom, and today we are going to be talking about the jobs report that came out. Going back to previous episodes, I talked about how we were anticipating interest rates to continue to go down — possibly at a very, very slow pace, coming down the escalator — and that where interest rates were a week or two ago were the very best interest rates that we've had.

Many clients have thought the best thing to do is just hold — wait, don't refinance, don't pull the trigger to reduce their interest rate. Many of them are at rates above 7% — 7¼, 7½, even 7¾ — and they've chosen to ignore that quick downturn we had and wait longer, expecting rates to come down further. I mentioned in last week's show that there was no way to know for sure whether rates would keep going down, how quickly they'd fall if they did, and that there was a very good chance the rates we were seeing were the best we're going to have for quite some time.

Well, today was a big burst to our bubble — exactly the point I'd made: we just don't know. Nobody can put out a call that says interest rates will keep going down. Nobody knows anything for certain.

Why a strong jobs report changes everything

Today, February 11, 2026, the jobs report came out better than expected — very, very strong. If you follow me and you've seen my shows after Federal Reserve meetings, where I've literally read their announcements and statements, you know they keep saying the goal is maximum employment and lower inflation, trying to get down to that 2% level. The Fed believes the way to get inflation down is to keep interest rates higher for longer.

At the most recent Federal Reserve meeting they held steady, but there was a lot of anticipation that they would cut rates again at the next meeting — and many were expecting a very poor jobs report today. Instead, we've got great news in the jobs category: more people gaining employment, more people earning money. That means the Fed doesn't have to feel pressured into cutting rates sooner than they'd like to keep the economy out of a tailspin. Because the jobs report is so strong, they can choose to continue holding higher for longer.

The morning briefing: the numbers behind the headline

I subscribe to a service as a loan officer — the Mortgage Market Guide — that sends videos every day, sometimes twice a day, keeping me abreast of what's happening with the 10-year notes and all the moving pieces, so I can stay on top of interest rates for my clients as we talk daily about whether to lock, wait, or hold. This morning's briefing laid it out clearly, so let me summarize what it covered.

It was a good report — with a caveat: there was a backward revision, and the revision removed more jobs than were created last year. But stocks, oil, and rates all moved higher in response to a number that beat expectations — and notably, the market moved higher on good news, which is normal behavior, instead of selling off on fears the Fed won't cut.

The headline showed about 130,000 jobs created, essentially double expectations. It gets better: private payrolls actually added about 172,000 jobs, almost three times expectations, and because the size of government shrank, about 42,000 government jobs came out — that's how you get to 130,000. On top of that, earnings were better than expected and people entered the labor pool — participation rose. So the January number was good, and that's why stocks moved higher. For loan pipelines, the guidance was to keep locking loans closing soon and watch the 10-year note, which was still below 4.20 — with the next big test being Friday's CPI report.

That video came out about 7 a.m. Pacific. Since then, as the day has gone on, we've continued to lose ground in the market — and I'm talking about what directly affects mortgage rates, not where you might invest your money. We're down about 13 basis points as of me filming this show, and the expectation is that it won't come back unless the CPI report comes in off-expectations one way or the other.

If you've been waiting, hear this

If you've been thinking, “I'm just going to wait and hope interest rates get better” — you might be waiting for quite some time. As I mentioned last week, the last time we got a nice quick rate drop, it lasted about four or five business days, and it took us seven months to hit those same levels again.

The point of this show is understanding what changes interest rates — that's the education — but also that waiting doesn't necessarily benefit you. Interest rates are like the roulette table: are you going to let it ride, or spin again? You cannot time the market, and when you think you've got it right, history proves you wrong.

Here's my practical guidance: if you have an interest rate above 6¾%, you really should be looking at a refinance right now. Depending on the scenario — and you learned last week how the scenario changes the rate you get — you could be as low as 5¾%, or around 6¼%. A one-point difference in rate can make a very significant monthly payment adjustment. Now, for some clients it doesn't do enough, and I'm honest with them when we talk through the numbers: if you've got a $200,000 or $300,000 loan and we're saving you 1%, your monthly savings won't be as large as for somebody with a $500,000, $600,000, or $700,000 loan. It's specific to you. But you should at least be exploring it, because there is no evidence that we'll see rates come down further over the next five to six months — and that's five to six more months of paying at these higher inflated rates.

What the Fed watchers are saying

Let me walk you through a Yahoo Finance article that came out this morning — credit where credit is due, it was written by senior reporter Jennifer Schonberger and published at 9:51 a.m. Pacific. It says a stronger-than-expected jobs report for January is likely to cement the Federal Reserve holding interest rates steady for a while. The report “pours cold water on the idea the Fed could cut rates again before midyear and will fuel internal debate as to how restrictive policy is and how much slack there is in the labor market,” according to Evercore ISI's head of economics and central banking, Krishna Guha.

The economy added 130,000 jobs in January, about double what economists anticipated, while the unemployment rate inched down to 4.3% and labor-force participation edged up. President Trump called the report far better than expected and posted that the US should be paying much less on its bonds — calling for the lowest interest rates and citing a potential trillion dollars a year in interest savings.

With the rate cuts last fall, many Fed officials feel enough has been done for now to support a job market that looked to be slipping last year — and the January report likely reinforces the expectation that they've done enough, while concerns about inflation linger. That's what I was saying earlier: the Fed felt forced to cut sooner than they wanted, out of fear the labor market was being hurt by holding rates high — but their concern was that cutting would send inflation right back up and undo three years of hard work. Today's report says there is no concern in the labor market. And remember, everything works off expectations: with this information, markets now expect no cut until midyear, maybe later.

The article continues: Kansas City Fed President Jeff Schmid said that with the cumulative rate cuts since 2024, the benchmark policy rate is no longer restraining the economy — and with inflation running closer to 3% than 2%, he sees it as appropriate to maintain a somewhat restrictive policy stance, because further cuts risk letting high inflation persist even longer. Cleveland Fed President Beth Hammack, a new voting member of the FOMC, said she believes growth will pick up this year thanks to recent cuts and fiscal support — and based on her view that inflation is still too high, the Fed “could be on hold for quite some time.” And Dallas Fed President Lorie Logan said the downside risks to the job market have meaningfully dissipated, and that the three cuts made last year to guard against deterioration have pushed up risks for inflation.

The Mortgage Mom's prediction

There is a very good chance we've seen the rate cuts we are going to see for a while. If I'm giving you my prediction — the Mortgage Mom's take — the very first rate cut we might possibly see could be in June or July. But I honestly think there's a very good chance we won't see something happen until September, or early fourth quarter. That's my prediction; I could be absolutely inaccurate, and something could change tomorrow — the CPI report could move things — but I honestly don't believe it will. If you've been watching me for any amount of time, go back two or three years: I kept saying I didn't think we'd see rate cuts until late 2024, and you could have put money on me.

Last week everybody was excited about the incoming Fed chairman, who has said he really agrees with rate cuts — and that was the driving factor behind “maybe it's a good idea to wait to refinance.” This report blows holes in that. However much he likes the idea of cutting rates, he still has to look at what is best for the economy and the consumer — and getting inflation down is what's best for the American people. It would not be to his benefit to start cutting rates if it would put us in harm's way.

Again, nobody has a crystal ball. All we can do is watch and see what the next Fed statement says. But if your original thought process was “I'll wait a little longer for rates to come down,” just know there's a good chance you could be waiting quite some time. It really might be worth giving me a call — go to my website, set up an appointment, let's do a consultation. I don't bite, I promise, and I don't hound you: I give you the information and let you come back when you're ready. What would it cost? How much would the monthly payment go down? How soon could you refinance again if rates fall further? Let's go over all of it and see if this benefits you.

Wrap-up

I don't see any questions on today's show — this was more of an educational one — but if you'd like to get on live and ask questions, text the word LIVE to 844-935-3634. That's 844-WE-LEND-4, and you can also call that number to reach me directly at my office. You can go to mortgagemomradio.com and listen to the podcast there, or on iTunes, Spotify — pretty much anywhere you like to listen. I jumped on a little early today because of a 2:00 meeting, but I'm typically live right at 1 p.m. Pacific, and I'll be back here next Wednesday on YouTube. Talk to you all real soon. Bye-bye.