U.S. homeowners pulled back on refinancing to start 2026, even as mortgage rates showed signs of easing. According to the latest Foreclosure Prevention and Refinance Report from the Federal Housing Finance Agency (FHFA), the average 30-year fixed-rate mortgage fell to 6.10% in January, down from 6.19% the month prior.

Despite the cheaper borrowing costs, total refinance volume declined to 67,035 loans, a drop from the 79,927 refinances recorded in December. However, among those who did refinance, the share of cash-out refinances increased to 41% of overall activity, which is well below the September 2022 peak of 82.4%. 

Additionally, the share of borrowers transitioning into 15-year fixed-rate mortgages rose 14.6%, a trend that continued even as the rate spread between 15-year and 30-year mortgages decreased.

The FHFA’s report revealed a mixed but overall stable landscape for mortgages. On the positive end of the analysis, foreclosure starts declined by 10.3% to 8,603 in January. During the same period, Fannie Mae and Freddie Mac completed 20,330 foreclosure prevention actions.

On the negative side, combined third-party and foreclosure sales experienced a 9.7% increase. And the serious delinquency rate — representing loans 90 days or more delinquent or actively in the foreclosure process — ticked up to 0.59% by the end of January.

Early-stage distress dropped, with the 30-to-59-day delinquency rate falling to 0.99%. The report also highlighted ongoing shifts in how servicers are managing distressed borrowers. Initiated forbearance plans decreased from 11,102 in December to 9,567 in January.

Consequently, the total inventory of loans in forbearance shrank by 8.5% to 42,733. This remaining inventory represents roughly 0.14% of the total loans serviced by Fannie and Freddie, and 7.61% of total delinquent loans. Meanwhile, the number of borrowers receiving payment deferrals after completing a forbearance plan increased to 7,344, up from 6,424 in December.

Permanent loan modifications remain a primary tool for keeping borrowers in their homes, accounting for 6,670 of the preventive actions taken in the first month of the year. A significant portion of these modifications, 62.4%, included principal forbearance, while 36.9% involved only a term extension.

Since the FHFA placed Fannie and Freddie into conservatorship in September 2008, the government-sponsored enterprises have completed about 7.3 million foreclosure prevention actions. Of those, permanent loan modifications account for about 38.7% of the total.