Thirty-year mortgage rates rose this week to 6.328%, a small increase from 6.261% last week, according to U.S. News data. Small fluctuations in borrowing rates are expected this winter, especially if economic conditions remain fairly stable.
The consensus among economists is that the Federal Reserve will hold its benchmark interest rate steady, not only at its upcoming first meeting of 2026, but through the first quarter of the year and possibly beyond. If interest rates and the 10-year Treasury yield don’t wiggle much, buyers can expect mortgage rates to remain in the low 6% range in the coming months.
Buyers Respond to Slight Dip in Borrowing Rates
Although mortgage rates rose slightly this week, they dropped by a small amount last week. That drop was enough to drive a surge in mortgage activity.
For the week ending Jan. 21, mortgage applications increased 14.1% compared with the prior week, reports the Mortgage Bankers Association.
“Mortgage rates declined further last week, driving another big week for refinance applications, which saw the strongest level of activity since September 2025,” said Joel Kan, MBA’s vice president and deputy chief economist. “Refinance applications accounted for more than 60% of applications, and the average loan size also moved higher.”
Kan also noted that purchase mortgage applications were up almost 18% year over year.
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It’s Shaping Up to Be a Buyer’s Market
Even though housing inventory remains sluggish, signs point to a buyer’s market in the first quarter of 2026.
Pending home sales in December decreased by 9.3% from the prior month and 3% annually, according to a National Association of Realtors report.
“Even after accounting for typical seasonal patterns, interpreting in-person home search activity in the winter — especially in December — can be tricky due to public holidays, people taking time off and wintry weather conditions,” said NAR Chief Economist Lawrence Yun. “We’ll be watching the data in the coming months to determine whether the soft contract signings were a one-month aberration or the start of an underlying trend.”
[See: When Will Mortgage Rates Go Down? See the 2026 Forecast]
However, Redfin is a bit more bullish on trends favoring buyers. In a recent report, it found a record 47.1% more home sellers than buyers in December. That’s the largest gap recorded since 2013.
At the same time, the number of homebuyers in the market dropped 5.9% on a monthly basis in December to about 1.34 million. That’s the largest drop since March 2023 and the lowest level on record since 2013.
But while it might seem like a buyer’s market on paper, the reality is that many buyers can’t afford to purchase a home due to elevated prices and borrowing rates. Economic uncertainty may also be keeping some would-be buyers on the sidelines.
If mortgage rates continue to dip in the coming weeks, it could result in more buyers entering the market. But many buyers are likely holding out for lower rates before making a move.
Those lower rates may come eventually. But based on current economic data and trends, rates are unlikely to fall dramatically during the first quarter of the year.
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Mortgage Rates Rise Slightly as First 2026 Fed Meeting Gets Closer originally appeared on usnews.com
