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After the record lows that mortgage interest rates remained near for the majority of 2020 and 2021, even a casual observer could tell you what a “good” rate was at the time. A rate of less than 4% was generally considered favourable during this time period, but there were plenty of possibilities below 3% as well, providing both homebuyers and owners cause to act. However, the economic climate, particularly the interest rate landscape, has shifted considerably since then.
Interest rates increased in tandem with the 2022 spike in inflation. However, rate reductions were once more implemented in 2023 and 2024 when it began to drop. In the latter four months of 2024 and the last four months of 2025, the Federal Reserve lowered interest rates three times. Furthermore, even while mortgage interest rates in particular are influenced by factors other than the central bank’s policies, they do significantly lower the cost of borrowing money for house loans.
This was seen in 2025 as mortgage rates declined by around a full percentage point from where they began the year. Additionally, this decrease might easily continue in the future due to upcoming data points and another Fed meeting scheduled for later in January. However, rates may already be low enough for many people to justify buying or refinancing.
In light of all of the above, what would be a reasonable mortgage interest rate at the beginning of 2026? We’ll go over what buyers should know before acting below.
In 2026, what would be a good mortgage interest rate?
Currently, the average mortgage purchase rate for a 30-year term is 5.87%, although the rate for 15-year alternatives is only 5.25%. However, since these are only averages, homebuyers can often anticipate finding rates that fall within a broad range; some will be higher, and others will be lower.
Having said that, if you can find rates for either term that are less than these, especially if the difference is significant, that can be regarded as a “good” or even “excellent” rate at this time, in early 2026. These are normally the best you can get right now in this very different economy, albeit they may not be nearly as good as they were at the beginning of the decade.
Nevertheless, interest rates on mortgages fluctuate daily. Additionally, there are a number of events scheduled for January alone, including the Fed’s end-of-month meeting and the upcoming inflation reading, which might result in further rate declines. Even while those drops are anticipated to be slow, any reduction benefits buyers who might otherwise have been on the sidelines waiting for an affordable opportunity to take action.
How can one find a mortgage rate that is less than 5.87% and 5.25%, respectively? In the same manner that you would have in the days of lower rates. To establish a baseline, think about shopping around and obtaining estimates from at least three different lenders. Then, by contrasting the least expensive solutions, try to get them to compete for your business. However, keep in mind that closing costs and fees may offset some of the benefits of the low rate that appears on paper.
Having a down payment that is more than the standard 20% that most lenders want can also be beneficial because it reduces risk for the lender, which frequently results in a lower rate for the borrower. Additionally, if you are approved at all, you may receive rate offers that are significantly higher than those mentioned above if you have a lot of debt or a poor credit score.
And keep in mind that borrowing money is always best done with knowledge, strategy, and caution—especially when it comes to a mortgage in the particular economic environment of today.
The final result
Buyers can now get “good” rates since the mortgage interest rate landscape has changed enough. It’s crucial to keep in mind that current rates are consistent with historical averages, even though they are not as low as they were a few years ago. Furthermore, there is no assurance that rates will drop any lower than they are now. Therefore, think about taking advantage of one of the current rates if you locate a house you want to purchase and can afford the related mortgage payments. If and when they become available, you can always refinance to a cheaper rate in the future.
