Housing News

Mortgage Interest Rates Drop to Lowest Point in More than Three Years

Homebuyers and homeowners are kicking off 2026 with some big money-saving opportunities.

Mortgage interest rates just dropped to their lowest point in nearly three-and-a-half years. Rates averaged 6.06% for 30-year, fixed-rate loans in the week ending Jan. 15, according to Freddie Mac data.

That was the lowest interest rates have been since mid-September of 2022, according to Freddie Mac. 

Mortgage rates were down from 6.16% in the prior week and dropped nearly a full percentage point from this time last year when they averaged 7.04%.

“The impacts are noticeable, as weekly purchase applications and refinance activity have jumped, underscoring the benefits for both buyers and current owners,” said Freddie Mac Chief Economist Sam Khater in a statement. “It’s clear that housing activity is improving and poised for a solid spring sales season.” 

Lower rates can help more buyers qualify for home loans and boost their purchasing power.

Someone buying a $400,000 home would save just over $200 a month with rates falling from 7.04% to 6.06%. That adds up to nearly $2,500 a year and almost $75,000 over the life of a 30-year, fixed-rate loan. (These calculations assume they put 20% down when they purchased the home.) 

Similarly, someone refinancing the same size loan would save the same amount. The higher the loan amount, the more substantial the savings.

Refinance applications were up 128% year-over-year in the week ending Jan. 9, according to the Mortgage Bankers Association. Meanwhile, purchase applications rose 13% over the same time last year.

Rates fell sharply late last week after President Donald Trump posted on Truth Social that he was directing Fannie Mae and Freddie Mac to purchase $200 million worth of mortgage bonds.

The president predicted the move would drive mortgage rates down. Rates temporarily fell after his post. 

Details on how the purchases would work and when they would begin were scant. 

Fannie Mae and Freddie Mac generally do not buy mortgage bonds. Instead, they bundle loans that lenders make into mortgage-backed securities, aka mortgage bonds, that are sold to investors. This frees up money for lenders to issue new loans. 

 “We expect mortgage rates to remain relatively steady in the low-6% range this year, which could support modestly improving home sales in 2026,” wrote Realtor.com Senior Economic Research Analyst Hannah Jones in an article on the listings portal.