Mortgage rates saw significant improvements in 2025, but will that continue this month? Here's what to know now.

Mortgage rates have finally slipped after a punishing stretch of volatility, and that shift is already reshaping what your home search could look like in early 2026. A modest dip in borrowing costs will not magically fix affordability,

Mortgage rates remain steady near 6.4% as analysts predict a 14% increase in 2026 home sales and tighter mortgage spreads.

The top economist at J.P. Morgan believes the Federal Reserve is done cutting interest rates and will hold policy steady through 2026, with the next move likely a hike in 2027. “We now expect the Fed to hold rates throughout 2026 with the next move to hike later in 2027,” wrote Michael Feroli, the bank’s chief US economist, in a client note.

Fannie Mae’s latest housing forecast projected the average 30-year fixed mortgage rates would be 6.2% in the first quarter of 2026 and decline to 5.9% by year-end (2). Despite these projected improvements,

Housing commentators have pointed to the relative stability of prices in recent times. Buying agent Henry Pryor said the UK housing market had moved on from the "red-hot" period for sellers in the aftermath of Covid.

Trump's plan has already pushed mortgage rates down, but industry experts say they're skeptical of a long-term impact on housing affordability.

"Mortgage rates are unlikely to move after a mild inflation report still marred by government shutdown-related distortions," Redfin wrote. "Looking through the statistical issues, inflation likely remains as expected, keeping the Fed on hold for the foreseeable future."