The national average 30-year rate is now 6.10%, according to Freddie Mac, which is still near its three-year low. However, the Federal Reserve did not lower the federal funds rate at its January 28 meeting, and it probably won’t cut its rate for several more months. So, what does this mean for the 2026 housing market? Will mortgage rates decline further soon?
Want to buy a house in early 2026? Here’s how to get started.
Mortgage rates are dropping overall. They are near their lowest levels in more than three years, though they’ve ticked up since la…
The national average 30-year rate is now 6.10%, according to Freddie Mac, which is still near its three-year low. However, the Federal Reserve did not lower the federal funds rate at its January 28 meeting, and it probably won’t cut its rate for several more months. So, what does this mean for the 2026 housing market? Will mortgage rates decline further soon?
Want to buy a house in early 2026? Here’s how to get started.
Mortgage rates are dropping overall. They are near their lowest levels in more than three years, though they’ve ticked up since last week.
As of January 29, Freddie Mac reported that the average 30-year fixed-rate mortgage rate is 6.10%. This is one basis point higher than last week, but 85 basis points lower than this time last year. In late January 2025, mortgage rates averaged 6.95%.
The average 15-year fixed mortgage rate this week is 5.49%. This is up five basis points since last week, but it is 63 basis points lower than this time last year.
In situations like these, it’s helpful to look at the numbers. Here’s the Freddie Mac data on mortgage rates for the past 52 weeks as of Jan. 29, 2026:
30-year fixed-rate mortgage: 6.06% to 6.95%
**15-year fixed-rate mortgage: **5.38% to 6.12%
Rates on 30-year and 15-year fixed-rate mortgages are both near their 52-week lows.
Discover the lenders with the best mortgage rates this week.
Mortgage rates decreased in the first two weeks of the year. President Trump made a bold proposal to unfreeze mortgage rates from their over 6% perch. He is pushing Fannie Mae and Freddie Mac, the government-sponsored enterprises that provide capital to the mortgage market, to buy billions of dollars in mortgage bonds.
The idea is to tighten the spread between mortgage rates and 10-year Treasurys (as explained below).
"This could bring rates down in the short run by a small amount, but to really move mortgage markets, you would need large, sustained, and credible asset purchases," said Realtor.com senior economist Jake Krimmel.
However, rates have bounced back up due to political issues and the Federal Reserve’s pause in rate cuts.
The Federal Reserve lowered the fed funds rate three times in 2025, but the central bank kept the rate stagnant at its first meeting of 2026. So, what does this mean for mortgage rates in the upcoming year?
When the Fed — the common nickname for the Federal Open Market Committee (FOMC) — held its September 2025 meeting, it voted to lower the federal funds rate by 25 basis points. Then, it announced its second 25-bps cut of the year at its October meeting and third at the December meeting.
That federal funds rate tends to directly influence rates on shorter-term lending. While mortgage rates aren’t directly based on the fed funds rate, they typically mirror fed fund rate trends. So, if the fed funds rate goes down, mortgage rates will likely follow. The inverse is also true.
When people anticipate a fed funds rate cut, mortgage rates usually fall in the weeks leading up to the meeting. However, home loan rates don’t necessarily continue to decrease after a fed funds rate cut.
In 2024, mortgage rates plummeted throughout August and early September as people expected the Fed to lower its rate at the bank’s September meeting. But mortgage rates stopped decreasing significantly after this meeting — and after the two additional rate cuts later that year.
The same thing happened in 2025. Mortgage rates gradually declined in the weeks leading up to the September meeting when people expected the Fed to lower its rate, and even though the fed funds rate did go down, mortgage rates bounced back up.
The Fed did not lower the fed funds rate at its January meeting, and it has indicated that it plans to cut its rate only once in 2026. The next Fed meeting is in mid-March, but it’s unlikely that the central bank will lower its rate at this meeting.
Dig deeper into how the Federal Reserve affects mortgage rates.
While short-term lending rates closely follow the fed funds rate, mortgage rates more closely follow the 10-year Treasury yield. As of January 29, the 10-year Treasury yield opened at 4.24% — down from 4.52% a year prior.
Now, you’re probably wondering why today’s mortgage rates aren’t in the 4% range, right?
To determine current mortgage rates, lenders add a “spread” to the 10-year Treasury yield. The spread is simply the difference between the rates consumers pay and the rate on the 10-year Treasury. Without getting too much into the weeds, charging a spread helps mortgage lenders cover costs associated with making loans to the public and the risk of providing such loans.
For example, the average 30-year fixed mortgage rate is 6.10%, and the 10-year Treasury yield is 4.24% — a spread of 1.86%. A year ago, the 30-year rate was 6.95%, and the 10-year yield was 4.52%, resulting in a spread of 2.43 percentage points. Today’s spread is smaller, which is one reason mortgage rates are lower now.
Follow these 8 tips to get a mortgage rate under 6%.
In short, no. You shouldn’t necessarily wait to buy a home until mortgage rates drop below 6% or lower. Mortgage rates are just one part of the affordability equation. You also have to consider home prices, a factor of housing supply and demand.
The current housing market is in a crunch. To put it simply, buyers outnumber homes for sale, especially homes in price ranges accessible to the first-time home buyer. When supply and demand are out of balance like this, home prices tend to remain high since sellers know they’ll have multiple buyers interested.
According to data from the Federal Reserve Bank of St. Louis, the median sale price of single-family homes has generally trended upward since Q1 of 2009. At that time, the median sale price was $208,400. The median price had risen to $410,800 by Q2 2025.
Even in the event of a recession, prospective buyers likely won’t see much relief. If interest rates drop like they tend to do in recessions, that will increase the number of people looking to buy and lock in a lower interest rate. That drives up demand for the already limited supply of homes.
To truly save, buyers need both interest rates and home prices to drop. Mortgage rates are inching down, and housing prices are stagnant or even lowering in certain parts of the country. Situations may be improving for buyers.
Learn how mortgage rates respond during a recession.
If you crave the comforts of homeownership, the best strategy in today’s market may be to buy what you can afford. Whether that means a smaller house or a condo instead of a single-family home, owning something puts you in a position to start building equity.
Yes, shopping for the best mortgage lenders with low rates and fees is crucial when getting a mortgage. But to help you find your ideal home that balances affordability and desirability, it pays to adopt a curious mindset and consider lesser-discussed financial tools.
There’s no better time to learn more about your local real estate market than today. By adopting a sense of curiosity, you could discover that your city has more to offer housing-wise than you previously thought.
You may want to take weekend excursions to lesser-known neighborhoods and suburban developments beyond the city limits. You never know what you’ll find that could expand your idea of what “home” looks like — including new developments, school districts, and types of homes.
If you’re looking to spend less on a home in today’s mortgage market, a house needing a bit of TLC could help you do just that. Loans like the FHA 203(k) mortgage can roll your purchase and renovation costs into one convenient loan. When you qualify and have an accepted offer, your lender immediately funds the home’s purchase price and puts the cost of renovations into an escrow account. As you make repairs, funds get dispersed.
How would it feel to have a longer commute yet come home to a house you love? Master-planned communities tend to crop up outside major cities, offering amenities like parks, shopping, and top-notch schools — all in exchange for a longer commute. These areas could look a lot more palatable if they offer commuting options like park-and-ride or commuter rail. Dare to consider parking the car and taking public transit if it could get you into the home of your dreams.
While shared walls, floors, and ceilings might not immediately scream “dream home,” they could help you find an affordable home in a terrific area. Condominiums come in various shapes and sizes, from apartment-style flats to townhomes. Depending on the area, you might even score a small backyard. However, be sure to consider HOA fees when calculating your monthly payment.
While the monthly payment on a 15-year mortgage will be higher than the typical 30-year, these loans have plenty of upsides. Not only will you pay off your home on a speedier timeline, but you’ll also likely score a lower interest rate and save a ton on interest over the life of your loan.
To make today’s mortgage rates more palatable, look into rate buydown options. An interest rate buydown lets you pay cash up front in exchange for a reduced interest rate on your mortgage. Buydowns can be permanent or temporary (for your loan’s first one to three years, for example). Even a few years of lower rate relief can make today’s home prices more affordable.
Read about the 5-year mortgage rate predictions.
Expert opinions differ on what mortgage rates will do over the next year or so. Fannie Mae’s January Housing Forecast put the 30-year fixed rate at 6% for most of 2026 and all of 2027.
Compared to historical mortgage rates, 7% isn’t considered a high rate. While it might be high compared to pandemic-era rates that were sub-3%, it’s on par with mortgage rates in the 1990s, and considerably lower than the double-digit rates seen in the late 1970s and early 1980s.
It’s not impossible to get a 3% interest rate, but doing so requires the perfect set of circumstances. You’d need to find a homeowner with an assumable mortgage — one that can be passed to a new owner at the same interest rate as the original loan. Assumable mortgages are generally government-backed loans from agencies like the VA, FHA, or USDA.
Laura Grace Tarpley* edited this article.*