Mortgage rates declined slightly this week, offering modest relief to prospective homebuyers navigating a challenging housing market. According to Freddie Mac, the average 30-year fixed mortgage rate fell two basis points to 6.09%, hovering just three basis points above the three-year low of 6.06%. Meanwhile, the 15-year fixed-rate mortgage dropped six basis points to 5.44%, continuing the gradual downward trend observed since late May of the previous year.
The latest data from Zillow shows current mortgage rates across various loan products. The 30-year fixed rate stands at 5.88%, while the 20-year fixed rate is 5.73%. For veterans, VA loan options remain particularly competitive, with 30-year VA rates at 5.52% and 15-year VA rates at 5.11%. These figures represent national averages rounded to the nearest hundredth, and actual rates may vary by lender and borrower qualifications.
New Home Price Cuts Signal Shifting Market Dynamics
In a notable development for the housing market, new home builders have ramped up discounts at unprecedented levels. According to a report from Realtor.com, price cuts on new homes have outpaced the resale market for the first time in recent history. Nearly one in five new homes saw price reductions in late 2025, signaling increased competition among builders and potentially creating opportunities for buyers.
This shift reflects broader challenges in the housing sector, where elevated home prices and persistent mortgage rates in the 6% range continue to constrain affordability. However, the combination of falling mortgage rates and builder incentives may gradually improve conditions for prospective buyers who have been sidelined by high costs.
Understanding Different Mortgage Rate Options
Borrowers seeking to purchase or refinance homes have multiple loan term options to consider. Fixed-rate mortgages lock in the interest rate for the entire loan duration, providing payment predictability. A 30-year fixed-rate mortgage offers lower monthly payments but higher overall interest costs, while a 15-year fixed-rate mortgage features lower rates and significant long-term savings despite higher monthly obligations.
Additionally, adjustable-rate mortgages provide an alternative for certain borrowers. ARM products like 5/1 and 7/1 loans feature fixed rates for initial periods before adjusting annually. According to Zillow data, 7/1 ARM rates currently stand at 5.84%, though recent ARM rates have been comparable to or even higher than 30-year fixed rates, diminishing their traditional advantage.
Mortgage Rate Forecasts Through 2027
Industry forecasters anticipate relatively stable mortgage rates over the coming years. The Mortgage Bankers Association expects the 30-year mortgage rate to remain near 6.1% through 2026, according to its January forecast. Similarly, Fannie Mae predicts average 30-year rates hovering around 6% throughout the next year.
Looking further ahead, mortgage rates are likely to see minimal movement in 2027. The MBA projects 30-year fixed rates between 6.2% and 6.3% for that year, while Fannie Mae forecasts rates near 6% for the full year. These predictions suggest the current rate environment may persist longer than some borrowers initially hoped.
Refinance Rates Show Similar Trends
For homeowners considering refinancing, current rates remain competitive though slightly elevated compared to purchase rates. According to Zillow, 30-year fixed refinance rates stand at 6.00%, while 15-year fixed refinance rates are 5.48%. VA refinance options continue to offer advantages, with 30-year VA refinance rates at 5.44% and 5/1 VA refinance rates at 5.03%.
Refinance rates typically run higher than purchase rates, though this pattern does not always hold. Borrowers should compare offerings from multiple lenders and loan products to identify the most favorable terms for their specific circumstances.
Market observers will continue monitoring economic indicators and Federal Reserve policy decisions that influence mortgage rate movements. While dramatic declines appear unlikely based on current forecasts, the recent downward trend and stabilization near three-year lows may provide a window of opportunity for buyers and refinancers in the coming months.
