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Despite interest rates slightly ticking down in 2026, the housing market remains sluggish after years of high prices and limited supply. Rates declined in 2025, but many borrowers are still in “wait-and-see” limbo, not sure whether mortgage interest rates will continue to drop, remain the same or climb back up.
The 10-year Treasury yield has a significant impact on mortgage rates, which historically run about 1.6% to 1.8% higher, though the recent spread has been greater. Market yields have increased from 4% in late November to 4.24% more recently. That could change depending on a plan to buy $200 billion in mortgage bonds to help bring mortgage rates down.
Some analysts expect mortgage rates to fall this year, including Morgan Stanley, which projects rates could hit 5.75%. While projections are never guaranteed, January did hold to form, though modestly. Based on FreddieMac data, the average interest rate on a 30-year fixed-rate mortgage declined from 6.16% on January 8 to 6.10% on January 29, though there are multiple ways in which to secure a rate under 6% right now.
Not exactly meaningful movement in three weeks, but could it signal a large rate drop in February? Or will rates stay the same or even rise? The answer will likely depend on several factors, including bond market movement, inflation, unemployment data and overall consumer confidence. We asked some experts for their thoughts on the direction of mortgage interest rates this February (and what it could mean for your budget). Below, we’ll detail what they anticipate.
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Where are mortgage interest rates headed this February?
Experts generally anticipate a modest decline in mortgage rates this month, even as market forces counterbalance each other. The Federal Reserve doesn’t meet again until March, so mortgage rates will likely be influenced more by inflation and jobs data than by a Fed policy decision.
“With softer inflation expected and a slight uptick in the unemployment rate in the data coming out in February, the direction of travel for mortgage rates is most likely southward,” said Christopher Hodge, chief economist of the U.S. at global financial institution Natixis CIB Americas. “The move is likely to be modest, but there is more pressure down than up.”
Indeed, that downward pressure likely won’t lead to a dramatic mortgage rate decline, especially if uncertainty causes the bond market to pause. “Mortgage rates look to hold fairly steady with some indications that we might see a slight dip,” said Max Slyusarchuk, CEO at A&D Mortgage. “The uncertainty with international affairs and how some things, like the Greenland deal, shake out, are leading to market volatility, which tend to bring down mortgage interest rates. However, the overall economy seems mostly stable, acting as a bit of a counterbalance.”
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Mortgage rate projections for February
Aaron Gordon, branch manager and senior loan officer at Guild Mortgage, expects “mortgage rates to average between 5.99% and 6.125% in February,” He said the market is beginning to anticipate that Fed chair Jerome Powell could be replaced in May. Gordon said steady or cooling inflation, along with a tightening job market, could also push mortgage rates downward.
“All these factors will lead to a small tick down in rates, but enough to meet the lowest rates we’ve seen in three years,” he said.
As mentioned, Freddie Mac pegs average interest rates at a hair over 6% and borrowers now have a few sub-6% mortgage rate options to explore. If rates continue to fall as predicted, might we see average rates dip below 6%? What would that mean for the housing market?
“I believe a rate below 6% in February is pretty likely,” Gordon said. “A rate with a ‘5’ in front is a huge psychological factor for many buyers who’ve watched the market closely for the last few years and have seen rates get close to 8%.”
Mortgage rates in the fives could be the jolt the market has been waiting for. As Slyusarchuk explained, “There appears to be a solid line of demarcation, with home buyers and existing homeowners waiting for ‘sub-6’s’ to act. One thing seems clear, the spark the housing industry needs starts with rates hitting that 6 or below threshold.”
The bottom line
Experts generally anticipate mortgage rates dipping slightly in February and potentially breaking the psychologically significant 6% barrier. Of course, rates are fluid, and bond market volatility, inflation, employment data and geopolitical developments could all influence where mortgage interest rates are headed this month.
While it’s wise to understand the current mortgage rate environment, attempting to “time the market” can be a futile exercise. Even those who make a living projecting rates can’t do so with 100% certainty.
Before proceeding with a mortgage application, run the numbers to ensure you can comfortably afford a home at today’s rates. If a new mortgage would stretch your budget too thin or there’s no rush to buy, it might make sense to wait and see how February plays out. But if you’re financially ready and the home fits your budget, waiting for a quarter-point drop in rates may not be wise, especially if home prices rise in the meantime.