{"id":223883,"date":"2026-01-02T18:48:08","date_gmt":"2026-01-02T18:48:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/223883\/"},"modified":"2026-01-02T18:48:08","modified_gmt":"2026-01-02T18:48:08","slug":"why-are-mortgage-rates-dropping-to-new-lows","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/223883\/","title":{"rendered":"Why are mortgage rates dropping to new lows?"},"content":{"rendered":"\n

Mortgage rates this week fell<\/a> to their lowest level in 15 months, easing borrowing costs for homebuyers eager for a thaw in the housing market in 2026.<\/p>\n

The average interest rate on a 30-year fixed mortgage stands at 6.15%, plummeting from a level of 6.89% in May, data from financial services company Freddie Mac<\/a> showed. Last January, the average 30-year fixed mortgage rate exceeded 7%.<\/p>\n

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Each percentage point decrease in a mortgage rate can save thousands or tens of thousands in additional cost each year, depending on the price of the house, according to lender Rocket Mortgage<\/a>.<\/p>\n

Sam Khater, the chief economist at Freddie Mac, called the drop in mortgage rates an “encouraging sign for potential homebuyers heading into the new year.”<\/p>\n

Mortgage rates closely track the yield on a 10-year Treasury bond, or the amount paid to a bondholder annually. Bond yields are shaped in part by expectations of the benchmark interest rate set by the Federal Reserve.<\/p>\n

The sharp drop in mortgage rates over the latter half of 2025 owed in part to data showing a slowdown<\/a> in hiring, which heightened expectations that the Fed would slash interest rates in an effort to boost the ailing labor market.<\/p>\n

Starting in September, the Fed cut<\/a> interest rates at three consecutive meetings, bringing the benchmark rate to a level between 3.5% and 3.75%. That figure marks a significant drop from a recent peak attained in 2023, but borrowing costs remain well above a 0% rate established at the outset of the COVID-19 pandemic.<\/p>\n

\"Mario Mario Tama\/Getty Images – PHOTO: A ‘For Sale’ sign is posted outside a single family home for sale on August 22, 2025 in Pasadena, California. <\/p>\n

After the Fed’s most recent rate cut in December, Fed Chair Jerome Powell suggested the central bank may be cautious about further rate reductions.<\/p>\n

“We’re well positioned to wait and see how the economy evolves,” Powell said.<\/p>\n

The housing market is suffering from a phenomenon known as the “lock in” effect, some experts previously told<\/a> ABC News.<\/p>\n

While mortgage rates have fallen, they remain well above the rates enjoyed by most current homeowners, who may be reluctant to put their homes on the market and risk a much higher rate on their next mortgage.<\/p>\n

In turn, the market could continue to suffer from a lack of supply, making options limited and prices sticky.<\/p>\n

Mixed results in recent economic data have clouded the outlook for the economy — and in turn, interest rates.<\/p>\n

A jobs report released two weeks ago showed<\/a> sluggish hiring and an uptick in the unemployment rate. Unemployment remains low by historical standards but has inched up to its highest level in years.<\/p>\n

Days later, a report on gross domestic product defied concerns stoked by the hiring slowdown. The U.S. economy grew<\/a> at a robust annualized rate of 4.3% in the third quarter in the government’s initial estimate, marking an acceleration from 3.8% growth recorded in the previous quarter, U.S. Commerce Department data showed.<\/p>\n

Futures markets expect two quarter-point interest rate cuts next year, forecasting the first in April and a second in the fall, according to CME FedWatch Tool<\/a>, a measure of market sentiment.<\/p>\n

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Redfin, a Seattle, Washington-based real estate giant, forecasts average 30-year fixed mortgage rates will remain in the low 6% range for most of 2026.<\/p>\n

“Mortgage rates will continue their slow slide but remain high relative to the pandemic era,” Redfin said<\/a> last month.<\/p>\n

“Lingering inflation risk and the likelihood that we’ll avoid a recession will keep the Fed from cutting more than the markets have already priced in. That’s why rates may dip below 6% occasionally, but not for any meaningful period,” Redfin added.<\/p>\n","protected":false},"excerpt":{"rendered":"Mortgage rates this week fell to their lowest level in 15 months, easing borrowing costs for homebuyers eager…\n","protected":false},"author":2,"featured_media":223884,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,113,16140,61,4751,60,10898,2416,115359],"class_list":{"0":"post-223883","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-freddie-mac","11":"tag-ie","12":"tag-interest-rate","13":"tag-ireland","14":"tag-mortgage-rate","15":"tag-mortgage-rates","16":"tag-mortgage-rates-this-week"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/223883","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=223883"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/223883\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/223884"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=223883"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=223883"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=223883"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}