2026 Mortgage Rate Forecast: Predictions and Trends to Expect
Introduction to Mortgage Rates in 2026
Mortgage rates have been a significant concern for potential homebuyers in 2026. As of January 8, 2026, the average 30-year fixed mortgage rate is 6.16%, according to Freddie Mac. This rate has been relatively stable, hovering within 11 basis points of its 2025 low since October 23. The question on everyone’s mind is: will mortgage rates continue to go down?
Understanding Mortgage Rates
Mortgage rates have generally been falling since the end of May 2025. However, rates stubbornly remain just above 6%. The average 15-year fixed mortgage rate is 5.46%, which is 68 basis points lower than this time last year. To understand the current state of mortgage rates, it’s essential to look at the numbers. The Freddie Mac data on mortgage rates for the past 52 weeks as of December 31, 2025, shows that current rates on 30-year and 15-year fixed-rate mortgages are both fractionally above their 2025 lows.
The Impact of Government Policies on Mortgage Rates
President Trump has proposed a plan 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. This plan aims to tighten the spread between mortgage rates and 10-year Treasurys. However, experts believe that this plan may not have a significant impact on mortgage rates. According to Realtor.com senior economist Jake Krimmel, “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.”
The Role of the Federal Reserve in Mortgage Rates
The Federal Reserve has lowered the fed funds rate three times in 2025. This move is expected to have a positive impact on mortgage rates. However, the relationship between the fed funds rate and mortgage rates is not direct. While the fed funds rate tends to influence rates on shorter-term lending, mortgage rates more closely follow the 10-year Treasury yield. As of January 8, the 10-year Treasury yield closed at 4.18%, which is down from 4.77% a year prior.
Why Mortgage Rates Aren’t in the 4% Range
The average 30-year fixed mortgage rate is 6.16%, and the 10-year Treasury yield is 4.18%, resulting in a spread of 1.98%. This spread is the difference between the rates consumers pay and the rate on the 10-year Treasury. Lenders add this spread to the 10-year Treasury yield to determine current mortgage rates. The spread helps mortgage lenders cover costs associated with making loans to the public and the risk of providing such loans.
The Housing Market in 2026
The current housing market is in a crunch, with buyers outnumbering homes for sale, especially in price ranges accessible to first-time home buyers. Home prices tend to remain high when supply and demand are out of balance. 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. The median price had risen to $410,800 by Q2 2025.
Strategies for Buying a Home in 2026
If you’re looking to buy a home in 2026, it’s essential to consider your options carefully. You may want to look into lesser-discussed financial tools, such as rate buydown options or FHA 203(k) mortgages. These tools can help make today’s mortgage rates more palatable. Additionally, you may want to consider buying a home that needs renovation or looking into shared ownership options, such as condominiums.
Conclusion
In conclusion, mortgage rates in 2026 are expected to remain relatively stable, with some experts predicting a slight decrease. However, the housing market is complex, and many factors can influence mortgage rates. It’s essential to stay informed and consider your options carefully when buying a home. By adopting a curious mindset and exploring different financial tools, you can find an affordable home that meets your needs. As one expert noted, “The best strategy in today’s market may be to buy what you can afford.” So, don’t wait – start exploring your options today. Remember, knowledge is power, especially when it comes to navigating the complex world of mortgage rates.
