US borrowers get more relief as rates dive again
Last week’s slide in mortgage borrowing costs took the average 30-year fixed rate to its lowest level for more than three years, Freddie Mac said Thursday.
That rate had tumbled to 6.06% by January 15, the government-sponsored enterprise (GSE) said, nearly a full percentage point lower than the same time last year when it averaged 7.04%.
The 15-year fixed rate also inched lower, slipping to 5.38% (compared with 6.27% the same week in 2025) in a decline that means it and the 30-year fixed rate are both below their monthly average.
The 30-year fixed average has not been this low since September 2022, when it was on a steady upward trajectory amid rampant inflation and a series of aggressive Federal Reserve rate hikes.
Rates slid late last week after President Trump said on social media that he would order Freddie and fellow GSE Fannie Mae to purchase an additional $200 billion in mortgage-backed securities to push rates lower.
And that decline helped the mortgage market begin the year with a roar as purchase and refinance applications both skyrocketed last week, according to the Mortgage Bankers Association (MBA).
Mortgage industry takes a calm approach to latest rate drop
Mortgage brokers aren’t getting ahead of themselves just yet despite that encouraging news, with few expecting homebuying activity to continue booming in the weeks ahead even after the latest uptick.
Yury Shraybman (pictured below), a broker with Innovative Mortgage Brokers in Philadelphia, told Mortgage Professional America he viewed that jump – which saw total mortgage applications rise by 28.5% – reflecting a standard seasonal trend of prospective buyers returning to the market as the new year begins.
“I did see a slight uptick in purchase applications within the last week or so,” he said. “Momentum is picking up. However, in my market I’d attribute the slight increase more to normal seasonality and people re-engaging after the holidays.
“December as usual has been slow, and now after the holidays people are back on the market. Some are starting, while others are continuing their search. As far as refinancing activity, I personally haven’t noticed any change over the last several weeks.”
Still, the latest drop continues a trend that’s seen rates move generally downward since the end of 2023, when they rose to levels not seen since the turn of the century.
In October of that year, the 30-year fixed average topped out at 7.79%, the height of a climb that pushed scores of borrowers to the sidelines and poured cold water over plenty of regional markets across the country.
But borrowing costs aren’t expected to slip dramatically further either this year or next. Fannie Mae’s latest forecast, released this week, indicated that it sees the 30-year fixed average hovering around the 6% mark in 2026 and 2027, at least suggesting a degree of stability will emerge for the rate outlook.
Fed policy unlikely to lend the housing market a helping hand
While mortgage rates don’t directly rise and fall in tandem with the Federal Reserve’s interest rate policy, the central bank’s approach influences 10-year Treasury yields, a key driver of 30-year fixed mortgage rates.
And market watchers don’t see much room for Fed cuts in 2026 either. J.P. Morgan chief economist Michael Feroli sees the central bank staying on hold throughout this year – and its next move isn’t likely to be a reduction.
“We now expect the Fed to hold rates throughout 2026 with the next move to hike later in 2027,” he wrote in a client note this week.
Home sales have plummeted across the country over the last two years – but even despite the meaningful decline in mortgage rates seen since the start of 2025, some economists still see major speedbumps ahead in the road towards a national market recovery.
“With home prices more than 50% above pre-pandemic levels and mortgage rates likely to settle somewhere in the 5.75% to 6% range, cost-of-housing challenges will remain a headwind for the housing recovery,” TD director and senior economist Thomas Feltmate and economist Admir Kolaj wrote in October.
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