Jamieson, Fausset and Brown on 1 Peter 2:10

10. Adapted from Ho 1:9, 10; 2:23. Peter plainly confirms Paul, who quotes the passage as implying the call of the Gentiles to become spiritually that which Israel had been literally, "the people of God." Primarily, the prophecy refers to literal Israel, hereafter to be fully that which in their best days they were only partially, God's people.

not obtained mercy--literally, "who were men not compassionated." Implying that it was God's pure mercy, not their merits, which made the blessed change in their state; a thought which ought to kindle their lively gratitude, to be shown with their life, as well as their lips.