Mortgage rates are not expected to return to 3% in the near future without a major shift, though many Americans would welcome a drop to 6%. According to Freddie Mac, average 30-year fixed rates have recently been in the low-6% range.
Recent Census data shows the median home price was $410,800 in the second quarter of 2025. With a mortgage rate of 6.16%, the average for a 30-year term as of January 8, the monthly principal and interest payment on a loan of that size would be approximately $2,505. This figure does not include homeowners insurance, mortgage insurance, or property taxes.
Over one year, the principal and interest paid on a $410,800 loan at 6.16% would total about $25,169. This represents nearly half of the country's median annual earnings. Financial guidance often suggests spending no more than 25% to 35% of income on housing costs.
The difference between a rate below 6% and current rates is notable. Rates have stayed in the low-to-mid 6% range for some time. For a median-priced home, the monthly payment difference between 6.5% and 6% is $134, or $1,608 annually.
Predictions for mortgage rates in 2026 vary among economists. The Mortgage Bankers Association projected in its December forecast that the average 30-year rate would remain at 6.4% throughout 2026. Fannie Mae's December Housing Forecast was more optimistic, anticipating a gradual decline to 5.9% by year's end.
"I would expect mortgage rates to stay in the current range until we see what direction inflation is heading," said Jennifer Beeston, executive vice president of national sales at Rate, in an email statement.
The December Consumer Price Index report, released in mid-December, showed core inflation, excluding food and energy, rose 2.6%. This was slightly below the 2.7% expected by Wall Street but not seen as sufficient to pressure the Federal Reserve to cut rates at its January meeting. Mortgage rates are likely to hold steady until the next inflation data is released.
Looking further ahead, rates on conventional loans are not expected to fall below 6% until late 2026 at the earliest. "In order for conventional mortgage rates to hit below 6%, we need to see a reduction in inflation as well as increased confidence in the continued containment of inflation, which is hard to currently envision given the macroeconomic and geopolitical outlook," Beeston stated.
Another expert noted that lower inflation and a rise in unemployment would be necessary to prompt Fed rate cuts. "Global investors would also need to prove their belief in U.S. Treasury and mortgage bond safe-haven trades if geopolitical conflicts keep escalating, which would push bond prices up and mortgage rates down," he said.
Additional unpredictability comes from a potential change in Federal Reserve leadership mid-next year and the long-term impacts of tariffs from the previous administration. "Sub-6% rates are unlikely until we see the inflation impacts of tariffs," the expert said. "But rates in the 6% to 6.5% range are possible ahead of the Fed leadership switch in May 2026."
While significantly lower rates are not imminent, prospective buyers can take steps to secure more affordable mortgages. Improving credit scores, making larger down payments, using rate buydowns, purchasing discount points, and shopping around with multiple lenders are recommended strategies. Freddie Mac estimates that obtaining quotes from at least four lenders can save around $1,200 per year.
Shorter loan terms or adjustable-rate mortgages may also offer lower rates than standard 30-year fixed loans. For those ready to buy but waiting for lower rates, the wait may not be worthwhile, as a sharp decline is not anticipated soon. Refinancing later remains an option.