Are Mortgage Rates Finally Going Down in 2026?

For the past three years, the phrase “when will mortgage rates drop?” has been a dominant financial question in the Kansas City metro. As of January 2026, the average 30-year fixed mortgage sits near 5.99%—a significant transition from the sub-3% rates of 2021, but a massive relief compared to the 8.0% peak seen in late 2023. Understanding if rates will continue to decline is essential for timing your next home purchase or refinance.

Are Mortgage Rates Finally Going Down in 2026?

The answer is a qualified yes. Most economists, bond strategists, and the Federal Reserve itself expect mortgage rates to trend lower through 2026 and 2027. While the descent is gradual, the high-probability path points toward 30-year fixed rates stabilizing in the mid-5% range by late 2026. To see how these shifts affect your specific buying power, you can track today’s mortgage rates in Kansas City here.

Where the Market Stands: January 2026 Benchmarks

  • 30-Year Fixed: 5.99% (Current Market Average)
  • 15-Year Fixed: 5.375%
  • 30-Year Jumbo: 6.25% (Based on 2026 $832,750 limits)
  • 10-Year Treasury Yield: 4.02%
  • Mortgage Spread: ~200 basis points (Normalizing toward the long-term average of 170 bps)

The Two Levers Moving Your Rate

  1. The Federal Reserve’s Policy Rate: While the Fed doesn’t set mortgage rates, their “neutral rate” target dictates the cost of capital for banks. See our Fed Meeting History for the latest policy shifts.
  2. The 10-Year Treasury Yield: This is the “real boss” of 30-year mortgage pricing. When investors feel confident that inflation is anchored, yields fall, and mortgage rates follow—often with a 4–8 week lag.

2026–2027 Mortgage Rate Forecast Consensus

The updated outlook from major housing authorities suggests a slow but steady decline for the 30-year fixed-rate mortgage:

Source 2025 Q4 (Actual) 2026 Q4 (Est) 2027 End (Est)
Fannie Mae 6.2% 5.9% 5.7%
MBA 6.1% 6.3% 6.0%
Freddie Mac 6.0% 5.8% 5.6%
Metropolitan Mortgage 5.9% 5.5% 5.2%

Check our full 2026 Mortgage Rate Forecast for monthly breakdowns.

What Different Rate Levels Unlock in Kansas City

  • 6.00% or lower: The “Refi Boom” threshold. Homeowners who took out loans in 2023-2024 can now see meaningful savings. Explore our refinance options.
  • 5.50%: Significant affordability gains. The monthly payment on a $400k loan drops roughly $350 compared to 6.5% levels.
  • 5.00%: Historically, this level triggers a massive surge in first-time buyer activity in the Kansas City housing market.

Practical Advice for Today’s Market

  1. Analyze the Strike Zone: If your current rate is 6.75% or higher, you are likely in the “strike zone” for a beneficial personalized refinance quote.
  2. Don’t Time the Absolute Bottom: In a competitive market like Lee’s Summit or Overland Park, waiting for a 0.125% drop could result in losing your dream home to another buyer. Get pre-approved now.
  3. Understand the Risk: Even as rates trend down, they can change daily. Review our guide: Can My Rate Change Before Closing?

Interest Rate Resource Center

Reviewed by Rick Woodruff, Senior Loan Officer. Last updated January 6, 2026.

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