Mortgage rates are a mess. Honestly, if you’ve been watching the charts lately, it feels less like a financial forecast and more like a high-stakes poker game where the dealer keeps changing the rules. We’ve spent the last few years waiting for that "big drop" that never quite seems to land. You know the one—the return to those mythical 3% rates we saw during the pandemic.
Spoiler: those days are gone.
But that doesn't mean things aren't moving. As of January 17, 2026, the national average for a 30-year fixed mortgage is sitting around 6.11% to 6.18%, according to recent Bankrate and Freddie Mac data. That is a massive relief compared to the 7.8% peaks we saw back in late 2023. Still, it’s not exactly "cheap" money.
So, are mortgage rates expected to go down further this year?
The short answer is yes, but don't go popping the champagne just yet. Most experts, from Fannie Mae to the Mortgage Bankers Association (MBA), are eyeing a slow, grinding slide toward the high 5s. We’re talking about a game of inches, not miles.
The Tug-of-War Between the Fed and the White House
The Federal Reserve has been in a weird spot. They spent 2024 and 2025 cutting the benchmark rate to keep the economy from stalling, but mortgage rates haven't always followed suit. Why? Because mortgage rates are actually more closely tied to the 10-year Treasury yield, which is basically a giant thermometer for how much investors trust the future.
Right now, that trust is being tested by a few things:
- Tariff Talk: There’s a lot of chatter about new tariffs pushing inflation back up. If prices for goods rise, the Fed has to keep rates higher to fight it.
- The "Trump Wildcard": With the administration pushing for more control over interest rates, some investors are getting jittery. Jittery investors demand higher yields, which keeps your mortgage rate high.
- Employment: The job market is actually holding up okay. Unemployment is around 4.4%, which sounds good, but it gives the Fed less "excuse" to cut rates aggressively.
Morgan Stanley analysts think we could see the 30-year fixed rate hit 5.75% by mid-2026. That sounds great, right? But they also warn that rates could actually start ticking back up in late 2026 and into 2027 if the economy heats up too fast. It's a narrow window.
Are Mortgage Rates Expected to Go Down Far Enough to Matter?
Here is the thing about a 5.75% rate versus a 6.2% rate. On a $400,000 loan, that’s a difference of maybe $115 a month. It’s not nothing—that’s a car payment for some people—but it’s also not the life-changing shift that makes a $600,000 house suddenly affordable for someone making $70k a year.
The real shift isn't just the rate. It's the balance.
For the last two years, we’ve been stuck in a "lock-in" effect. People with 3% mortgages didn't want to sell because they didn't want to trade their cheap loan for a 7% one. Now that rates are hovering near 6%, that gap is narrowing. We’re finally seeing more houses hit the market. Inventory is up about 10% in many regions, especially in the Midwest and South.
Regional Reality Check
If you’re looking in the Northeast or the West Coast, lower rates might actually be your enemy. When mortgage rates are expected to go down, every buyer who has been sitting on the sidelines for two years suddenly jumps back in. In markets with low inventory, that just sparks a bidding war. You might save 0.5% on your interest rate only to pay $50,000 more for the house itself.
Honestly, in places like California or Massachusetts, a rate drop can actually make things less affordable.
Why the "Wait and See" Strategy Usually Fails
I talk to people all the time who say, "I'm just going to wait until rates hit 5%."
It's a gamble. A big one.
Let’s look at the numbers. Most major forecasts—Fannie Mae, NAR, and Wells Fargo—all have the 2026 average between 5.9% and 6.4%.
- Fannie Mae: More optimistic, seeing 5.9% by year-end.
- NAR: Projecting a steady 6.0%.
- MBA: The "party pooper" of the group, predicting rates stay closer to 6.4%.
If you wait for a rate that never comes, you're also missing out on the equity you would have built. Home prices are still expected to rise by about 1% to 2% this year. That doesn't sound like much, but on a median-priced home, that's another $8,000 to $10,000 added to the price tag while you were waiting to save $100 a month on interest.
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What You Should Actually Do Right Now
If you're trying to figure out your next move, stop obsessing over the Fed's daily meetings. They don't control the mortgage market as directly as people think. Instead, focus on what you can actually control.
- Check the Refi Math: If you bought in late 2023 when rates were near 8%, 2026 is your year. Even at 6.1%, you are looking at significant savings. Most lenders suggest a 0.75% to 1% drop is the "sweet spot" to make the closing costs of a refinance worth it.
- Look at 15-Year Options: If you can swing the higher payment, 15-year fixed rates are currently averaging around 5.38%. That is a massive difference in total interest paid over the life of the loan.
- Don't Forget the "New Normal": We have to stop comparing everything to 2021. The average mortgage rate over the last 50 years is around 7.7%. In that context, 6% is actually pretty decent. It just feels expensive because we’re coming off a decade of "free" money.
The bottom line? We are in a period of stabilization. The wild swings of the early 2020s are mostly behind us. We are moving toward a market where "boring" is the goal.
Actionable Steps for Today
- Get a "Soft" Pre-Approval: Don't just guess what your rate would be. Have a lender run the numbers based on today's 6.06% average to see what your real-world payment looks like.
- Monitor the 10-Year Treasury: If you see the 10-year yield dropping toward 3.75%, that’s your signal that mortgage rates are about to follow.
- Audit Your Debt-to-Income: Since rates are staying in the 6% range, your DTI ratio is more important than ever for qualifying for the best possible "tier" of rates.
- Shop Three Lenders: I can't stress this enough. The "spread" between lenders is wider than usual right now. One bank might give you 6.3% while a local credit union offers 5.8% for the exact same credit profile.
The days of waiting for a miracle are over. The market is what it is, and for the first time in a long time, it's finally becoming predictable. Use that predictability to your advantage rather than waiting for a 3% rate that likely isn't coming back in our lifetime.