Thirty-year mortgage rates dropped to 6.325% this week, a negligible dip from 6.328% the previous week, according to U.S. News data, as borrowers awaited a rate decision by the Federal Reserve. Not surprisingly, the Fed opted to hold its benchmark interest rate steady during its first policy meeting of 2026.
In response to the Fed’s interest rate pause, Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association, said in a release, “MBA’s forecast has been for mortgage rates to remain in a relatively narrow trading range for the foreseeable future, likely remaining between 6% and 6.5% for 30-year conforming loans. The news from this meeting does not change our forecast for mortgage rates. We expect that this level of rates will help support a somewhat stronger spring housing market than last year, but not a breakout year.” The MBA also reported that mortgage applications decreased 8.5% from the prior week, ending Jan. 23. That includes refinance applications.
Melissa Cohn, regional vice president of William Raveis Mortgage and a 43-year mortgage industry veteran, says that at this point, it’s difficult to tell if or when another rate cut might come. But she agrees that current economic data doesn’t justify a rate cut at this time.
“The Fed continues to state that the rate of inflation has not dropped sufficiently,” she says, and “talk of new tariffs is not helping the situation.”
Cohn remains optimistic about the housing market, though. “We hope that 2026 will be the year that the real estate market rebounds, and lower interest rates are key to that happening.”
[READ: Compare Current Mortgage Rates]
Paused Interest Rates Unlikely to Impact Mortgage Rates
The Fed typically cuts interest rates to stimulate a slowing economy. There’s been pressure on the Fed to lower interest rates after an extended series of hikes that was meant to combat the rampant inflation spurred by the pandemic. But the Fed is unlikely to nudge interest rates downward anytime soon.
That’s not necessarily bad news for mortgage borrowers, though. Mortgage rates are closely tied to long-term interest rates, including the yield on the 10-year Treasury. The federal funds rate reflects the cost of overnight borrowing between banks, so it makes sense that the Fed’s rate cuts — or hikes — wouldn’t influence mortgage rates all that much.
What this means is that prospective homebuyers don’t necessarily have to follow the Fed’s every move in the coming months to see if mortgage rates are likely to dip. And if economic conditions remain fairly stable, borrowers should expect mild fluctuations in mortgage rates throughout the first quarter of the year and beyond.
[SEE: Current Mortgage Refinance Rates]
Buyers Could Soon Gain an Edge
All of this news may seem discouraging. But it’s important to remember that buyers may gain more negotiating power in today’s market as sellers grow antsy.
Redfin reports that in December, homes sat on the market for a median of 60 days, up six days from the previous year. If that trend continues, it could spur a notable dip in home prices, which could make up for mortgage rates stuck above 6%.
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Mortgage Rates Virtually Unchanged to Wrap Up January originally appeared on usnews.com
