US Mortgage Rates Hit the Lowest Level Since 2022—Here’s What STR Hosts Need To Know
Mortgage rates in the U.S. just dropped to levels we haven’t seen in more than three years.
On Friday, January 16, the average 30-year fixed mortgage rate fell to about 6.06%, down from over 7% a year ago—marking the lowest level since September 2022. Meanwhile, the 15-year fixed rate dipped to about 5.38%.
This drop has already sparked an increase in refinance and purchase activity—even as the broader housing market continues to wrestle with affordability and low inventory.
Could this be another sign 2026 is a strong year for investors? Let’s unpack what just happened, what’s driving it, and what it actually means for short-term rental hosts heading into 2026.
What Just Happened With Mortgage Rates?
After surviving frozen sky-high interest rates, everyone knows rates don’t drop overnight without a reason. Here's what happened:
1. Trump Government Action and Bond Purchases
Earlier this month, and accelerating into Friday’s rate drop, mortgage rates dipped after a major announcement.
President Donald Trump called for a $200 billion purchase of mortgage bonds through the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation (AKA Fannie Mae and Freddie Mac)—a move designed to push mortgage rates lower.
When investors buy mortgage-backed securities, demand for those bonds increases. That demand helps push yields down, and then lenders can offer cheaper mortgage rates.
In this case, that translated into the average 30-year fixed rate falling into the low-6% range by the end of last week.
2. The Federal Reserve Has Been Cutting Its Key Rate
Throughout 2025, the Federal Reserve lowered the federal funds rate three times.
The federal funds rate is the interest rate banks charge each other for overnight lending. While this number doesn’t directly set mortgage rates, it strongly influences how expensive borrowing feels across the economy.
When the Fed signals that rates are coming down—or even that they’re done hiking—markets respond. Lower expectations for future rate hikes often help pull down longer-term borrowing costs, including mortgages.
It’s not a 1-for-1 relationship, but it absolutely plays a role.
3. The 10-Year Treasury Yield (The Quiet MVP of Interest Rates)
Mortgage rates tend to track the 10-year Treasury yield more closely than the Fed funds rate itself.
The 10-year Treasury yield reflects how much investors earn lending money to the U.S. government for 10 years, and it acts as a benchmark for long-term interest rates like mortgages.
As of mid-January, the 10-year Treasury yield had dipped to 4.23% compared to 4.79% from 2025, helping pull mortgage rates down with it.
What Does This Mean for the 2026 Housing Market?
Lower mortgage rates make borrowing cheaper—at least on paper. And we’re already seeing some movement:
And in fact, recent data shows:
- Refinance applications jumped
- Home purchase demand ticked up
- Monthly payments for new buyers dropped compared to last year
But here’s the reality check.
Even with lower rates, home prices remain high, and inventory is still tight.
Many homeowners are sitting on older mortgages with rates well below 5%. because they don't want to give up cheap loans. This “lock-in effect” continues to limit housing supply and turnover, keeping prices high.
So while the rate drop is welcome, it doesn’t magically fix affordability or flood the market with listings.
What the Interest Rate Drop Looks Like in Real Numbers
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Let’s make this practical.
This time last year, the average mortgage rate was about 7.04%.
If you bought a $450,000 home with 20% down, your monthly principal and interest payment would’ve been roughly $2,405.
At today’s average rate of 6.06%, that same loan would cost about $2,172 per month.
That’s a savings of roughly $230 per month—or nearly $84,000 over 30 years.
Not life-changing overnight, but for many buyers and investors, it’s the difference between being priced out and being able to make a deal work.
Takeaways for Airbnb Hosts
Here’s how this rate shift plays out for short-term rental investors:
1. Underwriting Gets a Boost (But Don’t Assume 5% Rates Are Back)
Lower rates make underwriting better—but today’s rates are still well above historic lows. Underwrite conservatively.
2. Refinancing Could Free Up Cash Flow
If you’re holding higher-rate debt, refinancing could improve your monthly cash flow—depending on your current loan structure.
3. Inventory Still Matters More Than Rates Alone
Lower rates can increase demand, and demand can push prices up. Keep watching local inventory trends closely.
If you want to see how these rate changes impact your buying power or returns, try our FREE Airbnb Affordability Calculator to run the numbers before making a move.
Bottom Line
Mortgage rates are now at their lowest level since 2022, thanks to a mix of policy decisions, bond market mechanics, and falling Treasury yields.
This could be another sign that 2026 is shaping up to be a strong year for real estate and short-term rentals.
But it's not a sign to invest on easy mode.
The investors who win in this environment will be the ones who:
- Do in-depth market research to find affordable, high-potential markets
- Focus on affordability and demand drivers
- Look beyond headlines and run the numbers
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