Mortgage Rates Today, Monday, January 26: Higher (But Still Low)

Average 30-year mortgage interest rates are higher today, but don’t sweat it: Rates are still around the lowest they’ve been in roughly three years.

The average interest rate on a 30-year, fixed-rate mortgage jumped to 6.08% APR, according to rates provided to NerdWallet by Zillow. This is 19 basis points higher than Friday and 31 basis points higher than a week ago. (See our chart below for more specifics.) A basis point is one one-hundredth of a percentage point.

Mortgage rates started moving decisively downward late last summer, dropping roughly 50 basis points between the end of July and mid-September. If you’re like, “Wait, doesn’t that line up with the Federal Reserve’s schedule?,” thank you for matching my nerdy energy. The central bankers held steady in July and shifted into rate-cutting mode in September, but mortgage rates did not wait for the central bankers to make their call. Mortgage rates dropped ahead of October’s cut, too. By the time the Fed made a third cut in December, for a grand total of 75 basis points’ worth of cuts, mortgage rates had fallen nearly that far. 

All of this to say that this week’s Federal Reserve meeting, where markets are expecting the bankers to hold rates steady, is unlikely to have any effect on mortgage interest rates. The good news, though, is that mortgage rates are already in a pretty nice spot.

Mortgage rates are constantly changing, since a major part of how rates are set depends on reactions to new inflation reports, job numbers, Fed meetings, global news … you name it. For example, even tiny changes in the bond market can shift mortgage pricing.

This week the Nerds’ eyes are on the Federal Reserve meeting, scheduled for Tuesday and Wednesday. Markets overwhelmingly agree that the Fed will vote to hold the federal funds rates steady. The funds rate is the interest rate banks pay to borrow from one another, giving them the liquidity to do things like make home loans. Central bankers have voted to lower the federal funds rate at their last three meetings, so this would mark the first pause since July.

When the federal funds rate moves up or down, other interest rates typically follow since, depending on the move, borrowing is about to get cheaper or more costly. For a while now though, we’ve seen mortgage rates moving ahead of the Federal Reserve. By the time the announcement to cut, raise or hold is made, average mortgage rates have already gotten to where the Fed is going. Average 30-year rates have been holding steady around 6% for a while now; the Fed doing likewise gives rates little reason to move at the moment.

While the Fed’s actual decision is pretty much a given, Federal Reserve drama could spice things up. Last Tuesday, Treasury Secretary Scott Bessent claimed that the president could reveal his pick for the next chair of the Federal Reserve sometime this week. If that’s announced, analysts will immediately begin trying to predict how the new chair might steer the Federal Open Market Committee after current chair Jerome Powell’s term ends in May.

Refinancing might make sense if today’s rates are at least 0.5 to 0.75 of a percentage point lower than your current rate (and if you plan to stay in your home long enough to break even on closing costs).

With rates where they are right now, you could start considering a refi if your current rate is around 6.58% or higher.

Also consider your goals: Are you trying to lower your monthly payment, shorten your loan term or turn home equity into cash? For example, you might be more comfortable with paying a higher rate for a cash-out refinance than you would for a rate-and-term refinance, so long as the overall costs are lower than if you kept your original mortgage and added a HELOC or home equity loan.

If you’re looking for a lower rate, use NerdWallet’s refinance calculator to estimate savings and understand how long it would take to break even on the costs of refinancing.

There is no universal “right” time to start shopping — what matters is whether you can comfortably afford a mortgage now at today’s rates.

If the answer is yes, don’t get too hung up on whether you could be missing out on lower rates later; you can refinance down the road. Focus on getting preapproved, comparing lender offers, and understanding what monthly payment works for your budget.

NerdWallet’s affordability calculator can help you estimate your potential monthly payment. If a new home isn’t in the cards right now, there are still things you can do to strengthen your buyer profile. Take this time to pay down existing debts and build your down payment savings. Not only will this free up more cash flow for a future mortgage payment, it can also get you a better interest rate when you’re ready to buy.

If you already have a quote you’re happy with, you should consider locking your mortgage rate, especially if your lender offers a float-down option. A float-down lets you take advantage of a better rate if the market drops during your lock period.

Rate locks protect you from increases while your loan is processed, and with the market forever bouncing around, that peace of mind can be worth it.

The rate you see advertised is a sample rate — usually for a borrower with perfect credit, making a big down payment, and paying for mortgage points. That won’t match every buyer’s circumstances.

In addition to market factors outside of your control, your customized quote depends on your:

• Location and property type

Even two people with similar credit scores might get different rates, depending on their overall financial profiles.

Maybe — but even personalized rate quotes can change until you lock. That’s because lenders adjust pricing multiple times a day in response to market changes.