2026 Mortgage Rates Outlook

Current Mortgage Rates (January 2026)

Rates shown are national averages for borrowers with 740+ credit scores and 20% down. Your rate may vary. Last updated: January 2026

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Mortgage rates in 2026 are a hot topic for anyone considering buying a home or refinancing. After the rate volatility of 2023-2025, many buyers are wondering: will rates finally come down, or is this the new normal?

In this guide, we'll share what the major forecasters are predicting, explain the economic factors driving rates, and most importantly—show you how to use our calculator to make smart decisions regardless of where rates go.

2026 Mortgage Rate Forecasts

Here's what major financial institutions and housing organizations are predicting for 30-year fixed mortgage rates in 2026:

Key takeaway: Most experts expect modest rate decreases through 2026, with rates potentially ending the year near 6%. However, forecasts have been notoriously wrong in recent years—plan for multiple scenarios.

What's Driving Mortgage Rates in 2026?

Understanding what influences mortgage rates helps you make better predictions—and better decisions. Here are the key factors at play:

Federal Reserve Policy

The Fed doesn't directly set mortgage rates, but its federal funds rate strongly influences them. After aggressive rate hikes in 2022-2023, the Fed has begun cutting rates. More cuts in 2026 would likely push mortgage rates lower—though not on a 1:1 basis.

Inflation

Inflation has cooled significantly from 2022 peaks but remains above the Fed's 2% target. If inflation continues declining, rates should follow. If it rebounds, rates could stay elevated or rise.

10-Year Treasury Yields

Mortgage rates typically track the 10-year Treasury yield, usually running 1.5-2 percentage points higher. When Treasury yields drop, mortgage rates typically follow within days or weeks.

Economic Growth

Strong economic growth can push rates higher as investors demand better returns. A slowing economy or recession fears typically push rates lower as investors flee to safer bonds.

The 2026 Outlook

Most economists expect continued, gradual economic cooling in 2026, which should support lower rates. However, geopolitical events, unexpected inflation spikes, or policy changes could alter this trajectory quickly.

How Rate Changes Affect Your Payment

Let's put rates in perspective. Here's how different rates affect your monthly payment on a $400,000 home with 20% down ($320,000 loan):

Key insight: Each 0.5% rate drop saves roughly $100/month on a $320,000 loan. Over 30 years, that's $36,000+ in interest savings. Use our calculator to see the exact impact on your specific loan amount.

Calculate Your Payment at Different Rates

Should You Wait for Lower Rates?

"Should I wait for rates to drop?" is the most common question we hear. Here's the honest answer: it depends, and timing the market is notoriously difficult.

Arguments for Waiting

• Forecasts suggest rates may drop 0.5% by year-end
• Each 0.5% saves ~$100/month on average loans
• You can build a larger down payment while waiting
• More inventory may come to market if rates drop

Arguments Against Waiting

• Rate forecasts are often wrong
• Lower rates typically increase competition and prices
• You're paying rent while you wait
• You can always refinance if rates drop significantly

The Math on Waiting

Let's say you wait 12 months for rates to drop from 6.5% to 6.0%. You save $104/month. But if home prices rise 4% during that year, a $400,000 home becomes $416,000—costing you $16,000 more in purchase price, plus $3,200 more in down payment. The rate savings takes years to offset the higher price.

Our Recommendation

Buy when you're financially ready and find a home you want—not based on rate predictions. If rates drop significantly after you buy, refinancing is always an option. The cost of waiting (rent + potential price increases) often exceeds the benefit of a slightly lower rate.

Strategies for 2026's Rate Environment

Here's how to approach the housing market in 2026's rate environment:

1. Get Pre-Approved to Lock Your Rate

Rate locks typically last 30-60 days. If you're actively shopping, get pre-approved and lock your rate when you find a home. This protects you from rate increases during your transaction.

2. Consider a Buydown

A temporary or permanent buydown can lower your rate significantly. Sellers sometimes offer buydowns as incentives. Our buydown calculator shows you whether this makes financial sense.

3. Shop Multiple Lenders

Rates vary by lender, sometimes by 0.25-0.5%. Getting quotes from 3-5 lenders can save you thousands over the life of your loan. Compare APR (which includes fees) not just the interest rate.

4. Plan for Refinancing

If rates drop 0.75-1% or more after you buy, refinancing can make sense. Our refinance calculator helps you determine when the math works out.

5. Consider ARMs Carefully

Adjustable-rate mortgages (ARMs) offer lower initial rates but carry risk if rates rise. A 5/1 ARM might make sense if you're certain you'll move or refinance within 5 years, but understand the worst-case scenario.

Frequently Asked Questions

Will mortgage rates go down in 2026?

Most experts forecast modest decreases, with rates potentially reaching 5.8-6.2% by year-end. However, forecasts have been unreliable recently. Plan for multiple scenarios rather than betting on specific rate movements.

Will we ever see 3% rates again?

The sub-3% rates of 2020-2021 were historically anomalous, driven by pandemic-era Fed policies. Most economists don't expect rates that low again without another major economic crisis. Plan around 5-7% as the "new normal."

How much will rates drop if the Fed cuts rates?

Fed rate cuts don't translate 1:1 to mortgage rate drops. A 0.25% Fed cut might move mortgage rates 0.1-0.15% over time. Mortgage rates also respond to bond market expectations, which often price in cuts before they happen.

What rate can I actually get?

Your rate depends on credit score, down payment, loan type, and property. The best rates go to borrowers with 740+ credit and 20%+ down. You might see rates 0.25-0.75% higher than advertised "best" rates.

Should I choose a 15-year or 30-year mortgage?

15-year mortgages have lower rates (typically 0.5-0.75% less) but higher payments. Choose 15-year if you can comfortably afford the payment and want to build equity faster. Choose 30-year for flexibility and lower required payments.

When should I refinance?

The old rule was "refinance when rates drop 1%." But closing costs matter too. Use our refinance calculator to find your break-even point—typically 2-4 years depending on your loan size and rate difference.

The Bottom Line on 2026 Rates

Mortgage rates in 2026 are expected to remain in the 6-7% range for much of the year, with potential for modest declines toward year-end. While that's higher than the pandemic-era lows, it's historically normal.

The key insight? Don't let rate speculation drive your timeline. Buy when you're ready, find the right home, and focus on getting the best rate available to you at that moment. If rates drop significantly later, refinancing is always an option.

Use our calculators to understand exactly how different rates affect your specific situation. That's far more valuable than any forecast.

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Calculate your payment at today's rates: Use our Mortgage Payment Calculator to see what your monthly payment would be—and model different rate scenarios.