Mortgage rates decreased to 6.25% from 6.32%, the lowest level since September 2024, but lower rates did not boost mortgage demand. Mortgage application volume dropped 9.7% over the two-week holiday period ending 2025 into the new year.

While homebuyers should not expect a drastic reduction in mortgage rates in the near term, rates could continue to fall through 2026. Fannie Mae predicts that mortgage rates will start off 2026 at 6.2% and drop to 5.9% by the end of the year. On the other hand, the Mortgage Bankers Association sees mortgage rates holding steady at 6.4% this year.

Redfin, a Seattle, Washington-based real estate giant, forecasts average 30-year fixed mortgage rates will remain in the low 6% range for most of 2026. "Mortgage rates will continue their slow slide but remain high relative to the pandemic era," Redfin said last month.

Mortgage rates started the year slightly above 7% but are heading into the holiday season near 6.2%. 2026 forecasts show little change ahead.

President Trump says he is directing the federal government to buy $200 billion in mortgage bonds, a move he said would help reduce mortgage rates at a time when Americans are worried about home prices.

Everything Americans thought they knew about personal finance was upended when the Federal Reserve started aggressively hiking interest rates to cool post-pandemic inflation. After more than a decade of ultralow rates,