Mortgage rates just dipped below 6%—why that matters right now
Mortgage rates have finally broken a barrier many buyers and homeowners have been watching for years. According to Redfin, the daily average mortgage rate fell to 5.99% on January 9—the first time it’s been under 6% in nearly three years—after President Trump ordered a $200 billion government purchase of mortgage bonds. That move helped push borrowing costs down quickly, and it’s already showing up in what matters most to households: affordability.
Redfin also reports that purchasing power has increased by about $30,000 over the last six months. In plain terms, the same monthly payment can now support a higher-priced home than it could recently—or allow you to buy the same home with more financial breathing room.
If you’re buying: more home for your payment (and more competition, too)
When rates fall, affordability improves fast because interest makes up a large portion of your monthly payment early in the loan. A drop from the mid-6% range to just under 6% can be the difference between:
- Qualifying for a larger loan without increasing your payment
- Affording the neighborhood you’d paused your search for
- Reducing monthly costs so you can keep cash for repairs, furnishings, or savings
But lower rates also tend to bring buyers back off the sidelines. That can mean tighter competition—especially for well-priced homes in move-in-ready condition. If you’re shopping now, consider getting ahead of the rush by tightening your financing plan and clarifying your “must-haves” versus “nice-to-haves.”
Buyer tip: Don’t just watch the rate—watch the full monthly payment. Taxes, insurance, HOA dues, and even discount points can change the real cost of ownership.
If you’re selling: demand may rise, and buyers may stretch further
Lower mortgage rates typically translate into more buyer activity. With purchasing power improving, more shoppers can qualify, and some buyers may be willing to bid higher because their monthly payment still pencils out.
For sellers, this environment can be helpful in three ways:
- More showings and stronger offers as affordability improves
- A larger pool of qualified buyers who can meet lending requirements
- Better odds of a smooth closing when buyers have more room in their budgets
That said, selling is still a strategy decision—especially if you’re also buying your next home. If you currently have a very low rate from prior years, you’ll want to compare your existing payment to what a new mortgage would look like at today’s rates, even if they’ve improved.
If you’re refinancing: it might be time to run the numbers again
Many homeowners gave up on refinancing during the higher-rate cycle. With rates back under 6%, it’s worth rechecking your options—especially if you bought or refinanced when rates were higher.
Refinancing can potentially help you:
- Lower your interest rate and reduce monthly payments
- Switch loan terms (for example, from a 30-year to a 15-year) to pay off the home faster
- Convert an adjustable-rate mortgage to a fixed rate for stability
- Access equity through a cash-out refinance (depending on goals and eligibility)
Refi tip: Focus on your break-even point—how long it takes monthly savings to outweigh closing costs. If you expect to move soon, a refinance may be less beneficial than other options (like a temporary rate buydown or making targeted extra payments).
What happens next: don’t assume rates move in a straight line
Mortgage rates respond to bond markets, inflation expectations, and policy shifts—so even big moves can be followed by volatility. The recent drop is meaningful, but day-to-day changes can still affect your payment and qualification. If you’re buying or refinancing, getting a clear plan for when to lock and what rate you’re comfortable with can protect you from surprises.
Whether you want to buy more home, list with confidence, or see if a refinance can lower your payment, the smartest next step is a tailored scenario review based on your income, credit, equity, and timeline.
Ready to explore your options? Schedule a free consultation with our team today!