Lead: On Jan. 28, 2026, the Federal Open Market Committee held its target federal funds rate at 3.50%–3.75%, and Redfin economist Chen Zhao says mortgage rates are likely to stay near current levels in the coming months. Freddie Mac’s Jan. 22 Primary Mortgage Market Survey shows the 30-year fixed rate averaged 6.09%, roughly a percentage point lower than a year earlier, encouraging more buyers to compare offers. Analysts at the Federal Reserve Bank of Atlanta emphasize that mortgage rates track longer-term Treasury yields—especially the 10-year—more closely than the Fed funds rate. The combined signals point to a housing market shaped more by Treasury yields and buyer behavior than by near-term Fed easing.
Key Takeaways
- The FOMC left the federal funds target range at 3.50%–3.75% on Jan. 28, 2026, citing steady economic activity and still-elevated inflation.
- Redfin’s Chen Zhao expects the Fed to hold rates through at least this summer after three quarter-point cuts in Q4 2024 (total 75 bps), and predicts mortgage rates will remain roughly where they are.
- Freddie Mac reported the 30-year fixed-rate mortgage averaged 6.09% as of Jan. 22, 2026, down from 6.96% a year earlier; the 15-year averaged 5.44%.
- The Atlanta Fed notes mortgage rates correlate more with the 10-year Treasury than with the federal funds rate because mortgage lifespans average seven to ten years.
- Between Sept. 2024 and Jan. 2025, the 10-year Treasury rose about 90 basis points while the fed funds rate fell roughly 80 basis points, demonstrating the divergence that can lift mortgage costs despite Fed cuts.
- Lower year‑over‑year mortgage averages have drawn more buyers into the market, but regional inventory and price dynamics will determine how much activity rises.
Background
The Fed’s Jan. 28 statement said economic activity has expanded at a solid pace, job gains have been modest, unemployment shows signs of stabilization, and inflation remains somewhat elevated. Those lines followed three 25-basis-point cuts the central bank made in September, October and December 2024. Policymakers now describe the policy stance as near neutral—close to the level neither stimulating nor restraining growth—reducing the case for immediate additional easing unless incoming data changes materially.
At the same time, the broader macro backdrop includes policy and tax changes that are expected to support activity, lowering recession odds in the near term according to Redfin’s assessment. That mix—stable growth, moderate labor-market improvement and contained inflation risks—helps explain why the Fed signaled a pause. For mortgage markets, however, the critical external driver is investor demand for longer-term Treasury debt; that flow, not the Fed’s short-term rate, frequently determines the path of fixed mortgage yields.
Main Event
On Jan. 28 the FOMC held its policy range at 3.50%–3.75% and explicitly noted it does not expect to resume cuts for the foreseeable future. Redfin’s head of economics research, Chen Zhao, interpreted the statement as a signal that the Fed will likely keep policy steady at least until mid-2026 while monitoring incoming data. Zhao wrote that mortgage rates should largely mirror that pause and remain near current levels absent a clear economic downturn.
The Federal Reserve Bank of Atlanta published analysis explaining why mortgage rates can diverge from the fed funds path. Economists Kris Gerardi and Domonic Purviance stressed that mortgages, with average lives of seven to ten years, are more sensitive to the yields on 10- and 20-year Treasuries. That relationship helps explain episodes—most notably between late 2024 and early 2025—when long-term yields rose even as the Fed trimmed short-term rates.
Historical intramonth data show the dynamic: after the Fed’s half-point cut in September 2024, mortgage rates moved from about 6.09% on Sept. 19 to roughly 6.84% by Nov. 21, before later easing. Similarly, when the Fed cut again in September 2025, mortgage rates briefly edged higher before receding—an outcome tied to shifts in the 10-year yield and investor positioning rather than the policy rate alone.
Analysis & Implications
For prospective homebuyers and refinancers, the key takeaway is that headline Fed moves are only one factor among many. Mortgage pricing reflects long-term Treasury yields, global capital flows, inflation expectations and supply-demand balance in the mortgage market. If the 10-year Treasury continues to drift lower, mortgage rates could fall further; if it rises, borrowers may see rates tick up even with a steady Fed.
The Fed’s narrowed room for cuts—given a neutral stance and firmer growth—reduces the odds of large rate relief driven by short-term policy in the first half of 2026. That implies fewer big swings in mortgage pricing from Fed action alone and more emphasis on economic surprises (inflation spikes or drops, a sharper slowdown) or external shocks that change Treasury demand. Regional housing activity will react unevenly: markets with tight inventory and strong demand may still see price pressure despite slightly lower nominal rates.
For lenders and mortgage-servicing markets, stable policy means business models will continue to rely on rate spread management and borrower acquisition incentives. Freddie Mac’s advice—to shop multiple quotes—remains practical: small decimal differences in quoted rates and fees can translate to thousands of dollars over a loan’s life, especially when refinancing volumes are sensitive to single-digit rate moves.
Comparison & Data
| Indicator | Sept 2024 | Jan 22, 2026 | Change |
|---|---|---|---|
| Fed funds target (range) | 4.25% (pre-cuts) | 3.50%–3.75% | -75 bps (Q4 2024 cuts) |
| 10‑year Treasury yield | ~(lower in Sept 2024) | (varied; rose ~90 bps into Jan 2025) | Up ≈90 bps (Sept 2024–Jan 2025) |
| 30‑yr FRM (Freddie Mac) | 6.09% (Sept 19, 2024) | 6.09% (Jan 22, 2026) | Year earlier: 6.96% (Jan 2025) → down ~0.87 pp YoY |
The table summarizes broad moves: policy easing in late 2024 reduced the fed funds rate by 75 basis points, while long-term Treasury yields and mortgage rates did not fall in lockstep and in some periods rose. Those mismatches highlight why mortgage borrowers should watch Treasuries and mortgage-market supply alongside Fed announcements.
Reactions & Quotes
“Available indicators suggest that economic activity has been expanding at a solid pace,” the FOMC said in its Jan. 28 statement, framing the decision to pause rate cuts.
Federal Open Market Committee (FOMC) — official statement
“Mortgage rates will stay where they are as the Fed keeps rates unchanged,” said Chen Zhao, noting the Fed does not foresee resuming cuts in the near term.
Chen Zhao — Redfin head of economics research
“Buyers always should shop around for the best rate, as multiple quotes can potentially save them thousands,” Freddie Mac chief economist Sam Khater advised, urging borrower diligence.
Sam Khater — Freddie Mac (market survey commentary)
Unconfirmed
- Whether and when the Fed will resume cuts beyond summer 2026 remains uncertain and depends on incoming inflation and growth data.
- Market speculation about the next Fed chair and its timeline is not settled and was not resolved by the Jan. 28 statement.
- Precise future path of the 10‑year Treasury yield is inherently uncertain and subject to global investor flows and risk sentiment.
Bottom Line
The recent Fed pause and Redfin’s outlook point to mortgage rates that are more likely to be driven by long-term Treasury movements and market forces than by imminent Fed policy cuts. For buyers and refinancers, smaller year‑over‑year declines in mortgage rates have already attracted more entrants to the market, but meaningful relief depends on Treasury yields moving down further.
Watch three variables closely in the months ahead: incoming inflation and payroll data that could alter Fed guidance, movements in the 10‑year Treasury yield driven by investor demand, and regional housing supply that will govern local price and sales reactions. In the current configuration, shopping multiple lenders and locking a competitive rate remain practical steps for households considering home purchases or refinances.
Sources
- TheStreet — Redfin coverage and reporting (media)
- Federal Reserve — FOMC statement (official) (official)
- Federal Reserve Bank of Atlanta — analysis on mortgage and Treasury linkages (regional Fed research)
- Freddie Mac — Primary Mortgage Market Survey (market survey) (market data)