Mortgage Rates Are Falling — Is Now the Time To Buy?
- - Mortgage Rates Are Falling — Is Now the Time To Buy?
Travis WoodsJanuary 27, 2026 at 5:05 AM
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If your 2026 goals include becoming a homeowner, but you’ve just been waiting for mortgage rates to drop to an unscary level, you may be in for some good news. In the short term, rates are relatively stable, but are lower than this time last year so it could be time to do more than a little window shopping.
However, with mortgage rates falling so precipitously, is now the time to buy a new home? Let’s explore.
Quick Take: What Will Mortgage Rates Be in 2026?
At the beginning of 2025, the average interest rate on a 30-year fixed mortgage hit 7.04%, per the Federal Reserve Bank of St. Louis. In September of the same year, those rates dropped to around 6.35%. As of December 2025, the average rate for a 30-year fixed loan is about 6.23% to 6.32%, whereas a 15-year fixed rate currently averages between 5.46% and 5.6%.
Experts predict that this downward trend will continue through 2026, with the 30-year fixed rate forecast to average around 6.3% in 2026, down from 6.6% for the yearly average in 2025.
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Why Are Mortgage Rates Falling?
While America’s current employment slowdown is unfortunate, the Federal Reserve just cut interest rates, which could alleviate the cost of borrowing. According to Rocket Mortgage, each decreased percentage point in the mortgage rate can actually save a homebuyer thousands — or even tens of thousands — in costs per year.
Is Now the Time To Buy?
While some may be tempted to purchase a home now, with mortgage rates as low as they currently are, others may wish to hold out for even further drops. So, which is the better path?
Fed Chair Jerome Powell has indicated that interest rates may indeed be cut even further in early 2026 and beyond. Before you use that information as a reason to wait, keep the following in mind: Rate cuts don’t always lead to lower mortgage rates.
“Rates could come down further, as the Fed has signaled the potential for two more rate cuts this year,” Lisa Sturtevant, chief economist at Bright MLS, told ABC News. “However, there are still risks of a reversal in mortgage rates. Inflation heated up in August and if the September inflation report shows another bump in consumer prices, it’s possible we could see rates rise.”
Ultimately, for those considering buying a home in 2026, it remains to be seen what will happen with mortgage rates for the rest of the year. While the Fed has signaled upcoming rate cuts, that doesn’t necessarily mean mortgage rates will drop, too.
Caitlyn Moorhead contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: Mortgage Rates Are Falling — Is Now the Time To Buy?
Source: “AOL Money”
