US Mortgage Rates Fall to 6.25%, Lowest Since September 2024: A Turning Point for the 2026 Housing Market
The start of 2026 has brought a long-awaited “New Year’s gift” to the American housing market. According to the latest data from the Mortgage Bankers Association (MBA), US mortgage rates fell to 6.25% for the week ending January 2, 2026. This marks the lowest level since September 2024, offering a glimmer of hope to a market that has been defined by stagnation and affordability crises for over two years.
For a 30-year fixed-rate mortgage, this 7-basis-point drop from the previous week is more than just a minor adjustment; it is a psychological and financial milestone. As the industry enters what many are calling the “Great Housing Reset,” these falling rates could be the key to unlocking millions of sidelined buyers and sellers.
The Numbers: 30-Year Conforming and Jumbo Rates
The downward trend was visible across multiple loan types, reflecting a broader stabilization in the financial markets and a cooling of the 10-year Treasury yield.
| Loan Type | Current Rate (Jan 2026) | Trend | Significance |
| 30-Year Fixed (Conforming) | 6.25% | Down 7 bps | Lowest since Sept 2024 |
| 30-Year Jumbo | 6.32% | Down 14 bps | Lowest since April 2023 |
| 15-Year Fixed | 5.44% | Down 6 bps | Boost for refinancing |
The drop in jumbo loans—typically used for high-end properties exceeding $806,500—is particularly noteworthy. Falling to 6.32%, it represents the most favorable borrowing environment for expensive homes in nearly three years.
Why Rates Are Falling Now
Several macroeconomic factors have converged to drive this decline at the start of the year:
- Federal Reserve Policy: Following a series of rate cuts in late 2025, the market is pricing in a “neutral” stance for 2026. Investors anticipate that the Fed will continue to trim rates cautiously to support a cooling labor market.
- Treasury Yield Correlation: Mortgage rates track the 10-year Treasury yield. As recession fears linger and inflation stabilizes near the 2% target, bond yields have softened, pulling mortgage costs down with them.
- The “Lock-In” Effect Thaw: For years, homeowners with 3% pandemic-era rates refused to sell. However, as rates approach the low 6s, the “gap” is narrowing, encouraging more “move-up” buyers to finally list their properties.
Impact on Affordability: The $200+ Difference
To understand the impact of this drop, consider a buyer taking out a $500,000 mortgage.
- At the 7.25% rates seen in early 2025, the monthly principal and interest payment was approximately $3,411.
- At today’s 6.25% rate, that same payment drops to roughly $3,078.
This creates a monthly saving of $333, or nearly $4,000 per year. According to the National Association of Realtors (NAR), every 1% drop in mortgage rates can bring over 5 million additional households back into the pool of qualified buyers.
Expert Perspectives: What’s Next for 2026?
While the 6.25% mark is an encouraging start, experts suggest a cautious outlook for the rest of the year.
“We are entering a transition year,” says Lisa Sturtevant, Chief Economist for Bright MLS. “While rates falling below 6% is a strong possibility by summer, buyers should expect volatility as the market reacts to shifting employment data and inflation readings.”
Key Predictions for 2026:
- The 5% Threshold: Some analysts, including those at Bankrate and Fannie Mae, predict that rates could dip as low as 5.7% by the end of 2026 if the economy continues to cool.
- Inventory Growth: Supply is expected to rise by up to 20% compared to last year as the “lock-in effect” disappears, giving buyers more choices and reducing the prevalence of bidding wars.
- Refinance Boom: Homeowners who bought at 7.5% or 8% in late 2023 are now entering the “strike zone” for refinancing, which could lead to a 30% increase in refi volume this year.
Conclusion: A Window of Opportunity
While we are not returning to the “free money” era of 3% interest, the fact that US mortgage rates fall to 6.25% is a definitive sign that the peak of the housing crisis is behind us. For first-time buyers and those looking to refinance, the start of 2026 represents the most accessible market in 16 months.
Frequently Asked Questions: US Mortgage Rates Fall to 6.25%
Following the news that US mortgage rates fell to 6.25%, the lowest level since September 2024, many homeowners and buyers have questions about what this means for the 2026 market.
1. Why did mortgage rates drop to 6.25% specifically now?
The drop to 6.25% (the lowest since September 2024) was primarily driven by:
- Surprising Inflation Data: Recent reports showed inflation retreating to 2.7%, lower than the 3% economists expected.
- Treasury Yields: Mortgage rates track the 10-year Treasury yield, which has declined as investors anticipate a more stable economic outlook for 2026.
- Fed Policy: The Federal Reserve’s three consecutive rate cuts to close out 2025 have finally filtered through to long-term mortgage lending.
2. Is 6.25% considered a “good” rate in the current market?
Context is key. While it is higher than the 3% “anomaly” rates of the pandemic era, it is a significant improvement over the 7.5%–8% peaks seen in 2023 and 2024. For the start of 2026, it represents the most affordable borrowing environment in 16 months.
3. If rates are lower, why did mortgage applications decrease?
According to the MBA, application volume dipped about 9.7% in early January. This is largely attributed to:
- Holiday Seasonality: The data covered the week ending January 2, which included New Year’s Day. Real estate activity traditionally slows to a crawl during the holidays.
- The “Lock-In” Effect: Many homeowners still hold rates below 4% and are waiting for even deeper cuts (into the 5s) before they are willing to trade up and sell their current homes.
4. Should I refinance now or wait?
If you purchased a home in late 2023 or 2024 with a rate near 7.5%, a move to 6.25% could save you over $300 per month on a $400,000 loan. Many experts suggest that a 0.75% to 1% drop is the “strike zone” for a refinance to pay for itself.
5. What is the forecast for the rest of 2026?
The consensus among major institutions (Fannie Mae, Bankrate) is optimistic:
- Projected Low: Many analysts believe rates could dip to 5.7% by mid-2026.
- Projected High: Most expect a ceiling around 6.5%, unless inflation takes a surprise turn upward.
- Inventory: Lower rates are expected to increase housing supply by 20% this year as more sellers feel comfortable entering the market.
