If you have been waiting for mortgage rates to drop, now is your chance to take advantage of 3-year lows. The average rate for a 30-year fixed-rate mortgage has dropped from 7.04% in January 2025 to 6.06% as of January 2026.
Let’s take a look at some of the factors that have contributed to reduced mortgage rates in January 2026. We will also talk about some reasons to consider purchasing or refinancing now rather than waiting.
Reasons Mortgage Rates Have Gone Down
You probably are aware that the midterms are scheduled to take place later in 2026. The administration is very focused on them. They want to appeal to voters. Lowering mortgage rates is a way to do that. So, they have had the Federal Housing Finance Agency purchase $200 billion worth of bonds from Fannie Mae and Freddie Mac, which has had the effect of lowering interest rates. A similar policy decision was made during COVID.
It’s also noteworthy that the CPI Inflation Report was released. It showed that the inflation rate is 0.2%. It was projected that it would be 0.3%. So, that is significantly better than expected.
Will Home Prices Rise or Fall?
Watching mortgage rates drop may bring up the question in your mind as to whether there is any chance that home prices are also going to fall in 2026.
The answer depends on where you are trying to buy. There are some markets where home prices may fall over the next year. But overall, and in many individual markets, they are expected to keep rising.
Benefits of Buying a Home Immediately
You could wait to buy a home to see if home prices or interest rates will drop further. But it may be more advantageous to go ahead and buy a home sooner than later. Here are some of the benefits of buying a home immediately.
- If interest rates go up instead of down, you will be glad that you locked in a lower rate by purchasing sooner.
- If home prices increase, you will also be glad that you purchased when prices were lower.
- You can immediately start building your home equity. The sooner you do this, the better, because then your equity has more time to increase in value.
- You can stop burning money on rent payments, and start putting it into an investment in your future.
- You may be able to purchase your dream home if it is on the market, rather than losing the chance.
It helps to keep in mind that in the future, if mortgage rates do drop further, you have the option of refinancing to a lower rate.
Low Mortgage Rate Benefits
Here are the advantages of low mortgage rates for FL homebuyers and homeowners.
- Keep monthly payments affordable: Lower interest rates can translate to lower mortgage payments. Even a 1% difference can save you hundreds of dollars a month. Just think how that can add up over the lifetime of your mortgage.
- Buy your dream home: Some homebuyers opt to keep their monthly payments low, but others may choose to purchase larger or more luxurious homes since they have that extra room in their budget thanks to a lower interest rate.
- Buy sooner: If you cannot afford to buy now at a higher interest rate, you might be able to afford it at a lower interest rate.
- Save money on mortgage interest: We have already talked about how you will pay less on interest every month with a lower mortgage rate. But if a lower rate means that you can get away with a shorter loan term, that will save you even more on interest. The fewer years you spend paying off your home loan, the fewer years interest will be charged at all.
- Stabilize finances: Consider a fixed mortgage rate. This mortgage rate format ensures that your rate will not increase if market rates go up in the future. The result is that your mortgage rate is a stable part of your financial life, keeping your mortgage payments predictable. If they go down, you can refinance later to switch to the lower rate.
Buy a Home or Refinance in Florida
Reduced mortgage rates represent a great opportunity for homebuyers and homeowners in Florida. If you are ready to begin, please give us a call today at 954-840-8811. We can help you purchase a home or refinance anywhere in FL.
