Mortgage rates are at a calm cruising altitude. While that makes locking a rate easy, it may disappoint borrowers seeking a home loan rate closer to or below 6%. What will it take for mortgage rates to move lower?
Are mortgage rates dropping?
As of July 9, Freddie Mac reported that the average 30-year fixed-rate mortgage rate was 6.49%. This is six basis points higher than last week. At this time in July 2025, mortgage rates averaged 6.72%, 23 basis points higher
The average 15-year fixed mortgage rate this week was 5.82%. This is up three basis points from last week, and only four basis points lower than this time last year.
Here’s the Freddie Mac data on mortgage rates for the past 52 weeks as of July 9, 2026:
Will mortgage rates trend down by the end of 2026?
Mortgage rates generally move in unison with the bond market. The 10-year Treasury yield has been wavering just above and below 4.5% for twoa months, and home loan rates are following suit, with little direction either way.
Ali Wolf, chief economist at NewHomeSource, believes that many home buyers and sellers remain in a holding pattern.
“This isn’t limited to existing home sales either; the majority of builders say demand is slower than expected, even with incentives being more commonplace than they were a year ago,” Wolf said in a statement. “Until buyers and sellers gain more confidence in where the market is headed, both sides are likely to stay cautious, and sales activity may stay subdued.”
The latest forecast from Fannie Mae expects mortgage rates to be in the 6.3% to 6.4% range through 2027.
The Fed is unlikely to play a role this year
The Federal Reserve lowered the fed funds rate three times in 2025, but the central bank has been on hold so far in 2026, including its most recent meeting on June 17. So, what does this mean for mortgage rates in the upcoming year?
That federal funds rate tends to directly influence rates on shorter-term lending. While mortgage rates aren’t directly based on the fed funds rate, they typically mirror fed fund rate trends. So, if the fed funds rate goes up, mortgage rates will likely follow. The inverse is also true.
The Fed — the common nickname for the Federal Open Market Committee (FOMC) — has a new chairman, Kevin Warsh, but the same game plan: keep rates unchanged for now. At this point, Wall Street traders aren’t expecting another rate cut this year; in fact, there are increasing odds of a rate hike as the next move, even as early as September.
Dig deeper into how the Federal Reserve affects mortgage rates.
Keep an eye on 10-year Treasury yields
While short-term lending rates closely follow the fed funds rate, mortgage rates more closely follow the 10-year Treasury yield. As of July 81, the 10-year Treasury yield closed at 4.57% — compared to 4.35% a year prior.
Now, you’re probably wondering why today’s mortgage rates aren’t in the 4% range, right?
To determine current mortgage rates, lenders add a “spread” to the 10-year Treasury yield. The spread is simply the difference between the rates consumers pay and the 10-year Treasury rate. Without getting too much into the weeds, charging a spread helps mortgage lenders cover costs associated with making loans to the public and the risk of providing such loans.
For example, the average 30-year fixed mortgage rate is 6.49%, and the 10-year Treasury yield is 4.57% — a spread of 1.92 percentage points. A year ago, the 30-year rate was 6.72%, and the 10-year yield was 4.35%, resulting in a spread of 2.37 percentage points. Today’s spread is smaller, which is one reason mortgage rates are slightly lower now.
Follow these 8 tips to get a mortgage rate under 6%.
Should you wait to buy until mortgage rates go down even more?
In short, no. You shouldn’t necessarily wait to buy a home until mortgage rates drop below 6% or lower. Mortgage rates are just one part of the affordability equation. You also have to consider home prices, a factor of housing supply and demand.
The current housing market is in a crunch. To put it simply, buyers outnumber homes for sale, especially homes in price ranges accessible to the first-time home buyer. When supply and demand are out of balance like this, home prices tend to remain high since sellers know they’ll have multiple buyers interested.
According to data from the Federal Reserve Bank of St. Louis, the median sale price of single-family homes has mostly trended upward since Q1 of 2009. At that time, the median sale price was $208,400. The median price had risen to $405,300 by Q4 2025.
Even in the event of a recession, prospective buyers likely won’t see much relief. If interest rates drop like they tend to do in recessions, that will increase the number of people looking to buy and lock in a lower interest rate. That drives up demand for the already limited supply of homes.
To truly save, buyers need both interest rates and home prices to drop. Mortgage rates are holding steady, and housing prices are stagnant or even lowering in certain parts of the country. Situations may be improving for buyers.
Learn how mortgage rates respond during a recession.
Strategies for buyers in today’s mortgage market
If you crave the comforts of homeownership, the best strategy in today’s market may be to buy what you can afford. Whether that means a smaller house or a condo instead of a single-family home, owning something puts you in a position to start building equity.
Yes, shopping for the best mortgage lenders with low rates and fees is crucial when getting a mortgage. But to help you find your ideal home that balances affordability and desirability, it pays to adopt a curious mindset and consider lesser-discussed financial tools.
Get curious
There’s no better time to learn more about your local real estate market than today. By adopting a sense of curiosity, you could discover that your city has more to offer housing-wise than you previously thought.
You may want to take weekend excursions to lesser-known neighborhoods and suburban developments beyond the city limits. You never know what you’ll find that could expand your idea of what “home” looks like — including new developments, school districts, and types of homes.
Consider a fixer-upper
If you’re looking to spend less on a home in today’s mortgage market, a house needing a bit of TLC could help you do just that. Loans like the FHA 203(k) mortgage can roll your purchase and renovation costs into one convenient loan. When you qualify and have an accepted offer, your lender immediately funds the home’s purchase price and puts the cost of renovations into an escrow account. As you make repairs, funds get dispersed.
Rethink your commute
How would it feel to have a longer commute yet come home to a house you love? Master-planned communities tend to crop up outside major cities, offering various amenities like parks, shopping, and top-notch schools — all in exchange for a longer commute. These areas could look a lot more palatable if they offer commuting options like park-and-ride or commuter rail. Dare to consider parking the car and taking public transit if it could get you into the home of your dreams.
Go condo
While shared walls, floors, and ceilings might not immediately scream “dream home,” they could help you find an affordable home in a terrific area. Condominiums come in various shapes and sizes, from apartment-style flats to townhomes. Depending on the area, you might even score a small backyard. However, be sure to consider HOA fees when calculating your monthly payment.
Consider a 15-year mortgage
While the monthly payment on a 15-year mortgage will be higher than the typical 30-year, these loans have plenty of upsides. Not only will you pay off your home on a speedier timeline, but you’ll also likely score a lower interest rate and save a ton on interest over the life of your loan.
Explore rate buydowns
To make today’s mortgage rates more palatable, look into rate buydown options. An interest rate buydown lets you pay cash up front in exchange for a reduced interest rate on your mortgage. Buydowns can be permanent or temporary, like for your loan’s first one to three years. Even a few years of lower rate relief can make today’s home prices more affordable.
Read about the 5-year mortgage rate predictions.
When will mortgage rates go down? FAQs
How soon will mortgage interest rates go down?
Experts aren’t looking for much lower mortgage rates in the coming year or so. Fannie Mae’s June Housing Forecast puts the 30-year fixed rate at 6.4% by the end of 2026 and predicts average rates to remain near 6.3% through 2027.
Is 7% a high mortgage rate?
Compared to historical mortgage rates, 7% isn’t considered a high rate. While it might be high compared to pandemic-era rates that were sub-3%, it’s on par with mortgage rates in the 1990s and considerably lower than the double-digit rates seen in the late 1970s and early 1980s.
Is it impossible to get a 3% interest rate on a mortgage?
It’s not impossible to get a 3% interest rate, but doing so requires the perfect set of circumstances. You’d need to find a homeowner with an assumable mortgage — one that can be passed to a new owner at the same interest rate as the original loan. Assumable mortgages are generally government-backed loans from agencies like the VA, FHA, or USDA.
