Thirty-year mortgage rates fell this week to 6.326%, down from 6.348% the week before, according to U.S. News data. That drop comes a few weeks after the Federal Reserve’s third consecutive interest rate cut in 2025.
Homebuyers shouldn’t necessarily expect a drastic dip in mortgage rates following the Fed’s December decision. When the Fed lowers its federal funds rate, it can indirectly lead to lower borrowing costs for consumers. But mortgage rates tend to follow long-term trends, like the 10-year Treasury yield, more closely than the federal funds rate.
Plus, there are other factors that influence mortgage rates, such as housing activity and market demand. It wouldn’t be surprising to see mortgage rates largely hold steady in the coming weeks, or dip only slightly.
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Mortgage Rates Could Fall This Year — Or Not
While homebuyers should not expect a drastic reduction in mortgage rates in the near term, rates could continue to fall through 2026. Fannie Mae predicts that mortgage rates will start off 2026 at 6.2% and drop to 5.9% by the end of the year. On the other hand, the Mortgage Bankers Association sees mortgage rates holding steady at 6.4% this year.
Whether mortgage rates decline notably in 2026 could hinge largely on broad economic activity. A slowdown in U.S. economic growth in 2026 could lead to lower Treasury yields — and lower mortgage rates as a result. But if that slowdown doesn’t happen, rates could hold steady or even rise.
[Read: Best Mortgage Refinance Lenders.]
January Could Be a Good Time to Buy
Homebuying activity tends to slow in the winter months, often due to weather-related constraints. Winter is generally not an optimal time to show off curb appeal, and so many sellers opt to wait until spring to list their homes.
In November, total U.S. housing inventory fell 5.9% from October, according to the National Association of Realtors. And as Lawrence Yun, the group’s chief economist, said in a release, “Inventory growth is beginning to stall. With distressed property sales at historic lows and housing wealth at an all-time high, homeowners are in no rush to list their properties during the winter months.”
Despite the challenge of limited inventory, January could prove a strategic time to make a home purchase. There’s generally less competition from buyers, especially since parents of school-age children are often loath to make a move in the middle of a school year. At the same time, child-free buyers could opt to sit out this month in anticipation of mortgage rates falling further or due to other financial priorities.
Given a recent dip in mortgage rates, albeit a modest one, it may not be a bad idea to see what’s out there this January. While inventory could pick up in the spring, so could competition. Buyers who are able to make an offer this month may find themselves with more negotiating power, allowing them to lock in lower purchase prices.
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Mortgage Rates Drop to Start Off 2026 originally appeared on usnews.com
