Where are Current Mortgage Interest Rates, and What is Coming in 2026?
Mortage interest rates have been one of the biggest factors affecting the real estate market.
So far this year, rates have fluctuated from the low 6% to low 7% range. In the last week, rates jumped up about 1/4% with uncertainty caused by the government shutdown. With news today that the shutdown is likely coming to an end, we may see rates begin to come down again.
Current mortgage rates have been around 6.25-6.5%. This obviously depends on your credit, debt-to-income ratio and the type of loan product you are considering. It could be higher or lower, depending on your situation.
Rates peaked around April in the low 7% range. They have been coming down in the last several months, but we haven't seen dramatic changes over the course of this year.
Inflation, economic conditions and indirect impact of decisions by the Fed have played the largeset part in how mortgage rates have changed.
What Can We Expect in 2026?
Most predictions I have seen are that mortgage rates won't change much in the first half of 2026, with the expectation that they will drop in the second half of the year to the mid to low 5% range.
I have seen an uptick in the housing market in the last couple weeks, which is not as common for this late in the year.
Part of that is due to dropping inventory, so buyers have fewer properties to choose from and have to compete for the same property if the location and/or condition is desirable.
Buyers are also thinking that if mortage rates drop, more buyers will enter the market and things will be more competitive. I think this will be the case in the late spring, early summer housing market. So some buyers are choosing to buy a home now, with the expectation of being able to refinance in 6 months or so.
How Should You Plan As A Buyer?
If these indicators are correct, and we can expect lower interest rates and more competition in 2026, buying during the holidays or January/February may be the best time.
Pros:
Buy a home before prices begin to rise
Less competition when other buyers are focused on the holidays
Be able to refinance in about 6 months
Cons:
Fewer properties available during the holidays, so fewer choices
You may need the interest rates to be lower to afford the type of property you are searching for
A further consideration, though, is that while lower interest rates may allow you to afford a higher price, if buyer activity increases with a drop in mortgage rates, the benefit of being able to afford more may be off-set by the increase in home prices.
Next Steps?
Please reach out to plan your home purchase, and begin the pre-approval process with a lender so you know exactly what interest rate you can get currently, and what price you can afford. Then you can determine if it is better to wait, or buy now.
If you need a recommendation for a great lender, I can give you excellent recommendations.
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