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If you’ve been waiting for an opening in the U.S. housing market, here’s an encouraging milestone you could have easily missed: Mortgage rates have reached a three-year low.

When the Federal Reserve resumed cutting its benchmark interest rate late last summer, 30-year mortgage rates that had been stuck in the mid-to-high 6% range for nearly a year were shaken loose. But it’s been a subtle downward crawl ever since. It wasn’t until this month (the week ending Jan. 15,) that the average hit 6.06% — the lowest for any week since September 2022, according to data from the big mortgage backer Freddie Mac.

Of course, if you’re looking to buy a house, the question is: Will rates keep dropping?

While this is just an average, we could be close to the floor for the next couple of years: A Jan. 13 projection from Fannie Mae, the other big mortgage financier, assumes rates will be stuck at 6.0% through 2027. And economists at the Mortgage Bankers Association predict rates will even go back up a bit next year, to 6.3%.

That said, mortgage rates can be hard to predict. Mortgages are bundled and sold to investors as bonds, so the interest rates borrowers pay are influenced not just by the Federal Reserve and lenders, but by the investors who buy those bonds.

That’s why President Trump recently directed Fannie and Freddie, which do a lot of the bundling, to buy $200 billion of their own mortgage bonds. The purchases, aimed at lower borrowing costs, could reduce rates by 10 to 15 basis points, according to Redfin economists.

So what?

When and if to buy a house often comes down to the math. And if you’re borrowing the money, mortgage rates are a big part of the equation.

A 6% 30-year loan would mean a monthly payment of roughly $1,920 on a $400,000 house, assuming a 20% down payment. While that’s not the $1,350 you would have paid when rates were 3% in 2020 and 2021, it’s also not the $2,300 you would have paid when they were 7.79% — the post-pandemic high.

Of course, the price on the house itself is another huge factor, and while wages are expected to rise more than property prices this year, some economists say it could take five years for them to fully normalize following their pandemic spike.

The bottom line: The housing market continues to be prohibitively expensive for many buyers, especially for first-timers who don’t own anything to trade up with. But as conditions improve, the question will be, increasingly, should they keep holding out — or is this as good as it's going to get in 2026?

Related Reading

Want to Buy a House in the First Half of 2026? Follow These Crucial Steps (Yahoo)

Americans Hit the Brakes on Driving—and It Could Shift the Housing Market in Reverse (Realtor.com)

Why America Stopped Building the 'Starter Home' (The Washington Post via MSN)

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