Mortgage rates have started 2026 lower than they were a year ago. That matters because even small shifts in rates can change monthly payments and buying power.
As of January 8, 2026, the average 30 year fixed mortgage rate was around 6.16 percent, compared with about 6.93 percent at the same time last year. That is a meaningful improvement for affordability, even if it does not feel dramatic headline to headline.
Why a small rate drop is a big deal
When rates move down, three things typically happen.
First, monthly payments improve, which can help a buyer qualify more comfortably or stay within a budget.
Second, buyers often regain confidence. Some people who paused their search re enter the market, which can increase competition for well priced homes.
Third, sellers tend to see better activity. Lower rates can support stronger showing volume and healthier offer dynamics, especially in price points where payment sensitivity is highest.
A simple example
On a $500,000 loan amount, moving from roughly 6.93 percent to 6.16 percent changes the principal and interest payment by about $250 per month. Taxes, insurance, HOA dues, and lender pricing will affect the full payment, but this gives a clear sense of why even a modest drop can feel significant.
What the Trump administration has said about buyer affordability
The administration has been publicly tying affordability to two broad themes: lowering borrowing costs and addressing competition in the single family market.
1. Pushing mortgage rates lower through mortgage bond purchases
In early January 2026, President Trump said he directed a large scale purchase of mortgage bonds, with the intention of driving mortgage rates down and improving buyer affordability. Reporting around that announcement noted that even if executed, many economists expect the impact to be limited, on the order of a small reduction rather than a major reset in rates.
2. Limiting large institutional buyers in single family homes
The administration has also discussed steps aimed at restricting large institutional investors from buying single family homes, positioning the idea as a way to reduce upward pressure on prices and improve affordability for everyday buyers. Coverage to date has emphasized that the details, scope, and timeline of any policy change were not fully clear at the time of the statements.
3. The bigger affordability constraint is supply
Even with policy proposals, affordability is still heavily influenced by inventory levels and new construction. Many analysts continue to point out that increasing supply is a slower process, and that the market often remains tight in desirable areas regardless of short term rate changes.
What to do if you are buying
If you are considering a move this year, the smartest approach is to focus on clarity rather than headlines.
Get your numbers clean and realistic.
Compare scenarios, including rate lock options and different down payment strategies.
Be ready to move when the right home appears because better rates can bring more buyers back into the market quickly.
Also keep a longer term strategy in mind. If you buy a home that fits your life and the payment works, you can still stay flexible if rates improve further later.
What to do if you are selling
If you are thinking about selling, this is a good moment to tighten your strategy.
Price with precision because buyers are still payment sensitive even with rates easing.
Make sure your home shows clean, bright, and well cared for because buyers compare more carefully when affordability is stretched.
Track showing activity week by week. Rate shifts can change buyer behavior fast and the early signals show up in traffic.
Let’s put real numbers behind the headlines. I will prepare a side by side affordability review based on your target price and down payment so you can make a confident decision in this rate environment. Send me your price range and ideal monthly payment and I will outline your best next steps.
