Mortgage Rates Hit A 3-Year Low. Here's How Far They Are From Record-Low 2021 Levels

Mortgage rates are dropping, getting tantalizingly close to the 6% mark as of mid-January 2026. Recently, the rate got another downward nudge when President Donald Trump referenced Freddie Mac and Fannie Mae liquidity and announced a government purchase of $200 billion in mortgage bonds. Trump, on Truth Social, said this purchase would make home buying more affordable by driving mortgage rates and payments down. 

Many experts believe that mortgage bond purchases can help lower interest rates. And indeed, on the day of Trump's January 9th announcement, rates dropped by 0.15%, from 6.21% to 6.06%, according to Mortgage News Daily. This meant that the average lender was now offering the lowest rates in nearly three years, since February 2, 2023. However, that's still more than 3.25% above the all-time low. As noted by Freddie Mac, in January 2021 — as the country struggled to emerge from the COVID-19 pandemic — rates sunk to a record low of 2.65%.

How far the rates will drop, and for how long is, up for debate. Some experts warn that the long-term impact of the bond purchases may be limited. Note that these bond purchases, as of January 13, have not yet occurred. Federal Housing Finance Agency Director Bill Pulte has confirmed the upcoming purchase on the social media platform X but declined to set a timeline.

According to the national brokerage firm Redfin News, as of November 2025, the housing market in the United States was experiencing its worst stagnation in 12 years. Pending sales were at a low in January 2025 at 477,141 and at a high in November 2025 at 502,003. The difference between the low and high figures — 24,862 — was the smallest since 2013. As further evidence of stagnation, new listings on the market, and their prices, have echoed the trend. Trump administration's push to lower mortgage rates represents an effort to galvanize the market.

As of 2025, many economists' mortgage rate predictions for the next five years foretold slow, steady, and incremental interest rate drops, with the caveat that monetary policy changes or other economic factors could affect this trajectory. If this rate drop trend does continue, the housing market could grow in 2026. In fact, during a Fox Business interview (via YouTube), real estate investor Barbara Corcoran predicted that the housing market would 'go ballistic' if the rates dropped below 6%. Although lower interest rates can make housing more affordable, home prices are still increasing, complicating the real estate landscape for potential buyers. According to Redfin, home prices went up by 2.9% year-over-year as of October 2025.