Will mortgage interest rates drop after the January Fed meeting?

The Federal Reserve issued an interest rate cut of 25 basis points in September 2025. Then another in the same increment in October and a third one by an identical amount in December. And mortgage interest rates largely responded positively, declining to 3-year lows, where they hovered in the final quarter of the year. Mortgage rates ended 2025 more than a full percentage point lower than where they started, too.

So, with another Federal Reserve meeting on the calendar for the end of January, homebuyers can comfortably predict another interest rate drop after that meeting, right? Unfortunately, the reality is more complicated than an automatic rate drop following the central bank’s meeting. Ahead of the next meeting, then, it helps to know what to consider. This can better help determine the value of taking action now versus waiting for mortgage rates to decline further. 

Below, we’ll break down the likelihood of another mortgage interest drop this January and what buyers may want to consider doing in the interim.

Start by seeing how low your current mortgage rate offers are here now.

Will mortgage interest rates drop after the January Fed meeting?

Predicting future interest rate movement is inherently difficult to do with precision, but especially so as it’s related to Federal Reserve action and even more so when it comes to mortgage interest rates, specifically. Mortgage rates, after all, are driven by a series of factors of which Federal Reserve activity is just one, albeit an important one. That said, as it pertains to the chances of a Fed rate cut timed to mortgage rate movement, as of mid-January, it appears unlikely that mortgage interest rates will drop after the January 28 Fed meeting.

For starters, a rate cut at the meeting is highly unlikely (the CME Group’s FedWatch tool lists the chances of a cut then at just 5% currently). And comments made in the press conference after the meeting have the potential to cause rates to stagnate further, especially if the timeline surrounding the next rate cut is unclear or seemingly delayed further. 

There’s also no Fed meeting on the calendar for February, meaning that even if there is encouraging economic data to support another Fed rate cut, borrowers will need to wait until March 18 for that cut to be formally issued. Borrowers should also note that the Fed paused rate cuts at the start of 2025, following a series of reductions in the final four months of 2024. So there’s recent precedent for holding off on rate cuts at the start of a new year or until economic conditions evolve in a way that encourages further movement.

So, mortgage interest rates are unlikely to drop after the January Fed meeting. That said, this is a fluid situation, and borrowers can potentially still find an affordable rate that fits their budget now without having to wait on the central bank to make its next move.

Start shopping for mortgage rates and lenders online today.

How to get a mortgage rate under 6% now

Right now, the average mortgage interest rate is just 5.87% for a 30-year term and 5.25% for a 15-year one. So rates here are already comfortably under 6% for qualified borrowers. If you’re a borrower who wants to get a rate closer to 5%, however, you’ll need to expend a little more effort. 

Shopping around for rates has helped borrowers find options that are 0.50% to 1% lower than what they otherwise would have typically received. Borrowers with good credit scores, of course, are offered lower rates than those buyers with scores that still need improving. And making a large down payment, bigger than the traditional 20% down payment most lenders require, can also help you secure a rate that’s a bit lower than 5.87% or 5.25%. Monitoring the interest rate climate daily, too, can help borrowers exploit small but timely windows of opportunity.

The bottom line

The likelihood of another mortgage rate drop after the Fed’s January meeting currently looks low, due to a variety of factors. That said, mortgage rates can change overnight, and market conditions that may not seem significant now can easily change and cause rates to move again, perhaps before borrowers even anticipate. Take this time, then, to position yourself as a credible, reliable borrower so that you’re ready to lock in a low mortgage interest rate when it inevitably materializes again.