What are current mortgage rates in 2026?

As of January 2026, 30-year fixed mortgage rates are hovering in the 6.4% to 6.6% range. Rates are expected to remain around 6.5% in Q1-Q2 2026, with potential drops to 5.9%-6.1% by year-end if inflation continues to cool.

Will mortgage rates drop below 6% in 2026?

Many economists predict rates could dip to 5.9%-6.1% by Q3-Q4 2026 if inflation remains near the Federal Reserve's 2% target. However, rates are expected to remain "sticky" around 6.5% in the first half of the year as the Fed monitors economic data.

Should I lock my mortgage rate or wait for it to drop?

Trying to time the market is risky. While waiting for lower rates might save interest, home prices are continuing to rise in many markets. Waiting six months for a 0.5% rate drop could cost more if home prices increase by 5% in that time. Lock your rate if you've found your home and are within 30-60 days of closing.

How much does a 1% rate change affect my buying power?

A 1% drop in mortgage rates increases your buying power by roughly 10%. For example, at 7.0%, a $2,000 monthly budget buys approximately a $300,000 loan. At 6.0%, that same $2,000 buys approximately a $335,000 loan. Use our mortgage calculator to see how rate changes affect your specific situation.

What factors influence mortgage rates in 2026?

Key factors include Federal Reserve policy decisions, inflation trends (targeting 2%), economic growth and labor market conditions, housing market supply and demand, and global economic conditions. The Fed monitors these indicators closely when setting interest rate policy.

When is the best time to buy a home in 2026?

The best time depends on your personal situation. Early 2026 (Q1-Q2) offers relatively stable rates around 6.5%—good for locking in if you're ready. Late 2026 may see lower rates (5.9%-6.1%), but don't delay solely for rate drops as home prices may continue rising. Focus on finding the right home at the right price rather than trying to time rates perfectly.

Mortgage Rate Forecast 2026: Will Rates Drop Below 6%?

After the volatility of the last few years, 2026 is showing signs of stabilization in the housing market. As of January 2026, the 30-year fixed mortgage rate is hovering in the 6.4% to 6.6% range, but many economists see relief on the horizon.

The 2026 Forecast

Most major financial institutions, including the Mortgage Bankers Association and Fannie Mae, predict a gradual cooling of rates throughout the year.

Q1-Q2 2026

Rates are expected to remain "sticky" around 6.5% as the Federal Reserve monitors inflation data.

Q3-Q4 2026

If inflation remains near the 2% target, forecasts suggest rates could dip to 5.9% - 6.1% by year-end.

Key Factors Influencing 2026 Rates

Federal Reserve Policy: Interest rate decisions based on inflation and employment data
Inflation Trends: Target of 2% annual inflation rate
Economic Growth: GDP growth and labor market conditions
Housing Market Demand: Supply and demand dynamics in the real estate market
Global Economic Conditions: International markets and geopolitical factors

Should You Lock or Float?

Trying to time the market is risky. While waiting for a 5.9% rate might save you money on interest, home prices in many markets are continuing to rise. Waiting six months for a 0.5% rate drop could cost you more if the home price increases by 5% in that same time.

Rate Lock Strategy

Lock your rate if:

You've found your dream home and are ready to close
Rates are at or near your target (within 0.25%)
You're within 30-60 days of closing

Float (wait) if:

You're still house hunting (rates can change daily)
You're more than 60 days from closing
Economic indicators suggest rates may drop soon

The Impact on Your Wallet

Even a small change in rates makes a massive difference in buying power. A 1% drop in rates increases your buying power by roughly 10%.

At 7.0%

A $2,000 monthly budget buys a

~$300,000 loan

At 6.0%

That same $2,000 buys a

~$335,000 loan

The Math Behind Buying Power

A 1% rate decrease (from 7% to 6%) on a $300,000 loan saves approximately $200 per month in principal and interest. This extra buying power allows you to afford a home that's roughly $35,000 more expensive while keeping the same monthly payment.

Check Today's Math

Rates change daily. Before making an offer, see how today's rates affect your payment to ensure you are staying within your budget.

Our mortgage calculator helps you:

Calculate monthly payments at current rates
Compare different interest rate scenarios
See how rate changes affect your buying power
Plan your budget based on today's market rates

Calculate Your Payment →

What This Means for Homebuyers in 2026

The projected rate trends for 2026 present both opportunities and challenges:

Early 2026 (Q1-Q2)

Rates are expected to remain relatively stable around 6.5%. This is a good time to lock in a rate if you're ready to buy, as waiting may not result in significant savings and home prices could continue rising.

Late 2026 (Q3-Q4)

If inflation continues to cool, rates may drop to 5.9%-6.1%. However, don't delay buying solely for rate drops—home price appreciation could offset any savings from lower rates.