What Mortgage Rates Did in January 2026 and How That’s Shaking Up South Jersey + Philly

January 2026 was a month that mortgage watchers across the country breathed into their spreadsheets and crossed their fingers. After more than two years of high borrowing costs, the big national story was that mortgage rates finally started to soften—not in some dramatic crash-and-burn way, but in a slow, noticeable slide that felt realistic.

The average 30-year fixed mortgage rate sits between 6.1% and 6.2%, with the 15-year fixed just over 5.7%.

For much of January we saw low-to-mid-6s, even though earlier in the month we—very briefly—saw a 5.99% 30-year fixed which had everyone very excited. These 5s to 6s are lower than what we saw for much of 2025, when 30-year rates were routinely above 7%.

And that 5.99%? That pushed them to the lowest levels seen in a couple of years. But what’s driving this? There's a mix of factors:

Plus a handful of policy signals that spiked optimism (whether they actually change reality or not).

Here’s the bottom line: a move from, say, 7% to 6% on a 30-year mortgage can actually boost your buying power—not by a tiny sneeze, but by a noticeable chunk. Lower rates mean:

So in markets like South Jersey and Philly—where price growth was steady and demand didn’t collapse—even this modest dip helped bring fence-sitting buyers back into the game. Realtor websites and local market observers reported that when rates nudged into the low-6% range, loan applications climbed.

That makes sense: higher costs had scared plenty of people off in 2024 and 2025, and for months buyers were stuck watching rates bob around in a range that still felt too pricey. January’s slight improvement gave confidence that something might actually be changing.

Demand is especially strong in South Jersey suburbs that are close enough to Philly and South Jersey shore towns that still feel attainable. Even with inventory tight, buyers who had been priced out earlier in the year started coming off the sidelines.

Lower mortgage rates tend to pull more buyers back into the market fast—often faster than new inventory can keep up. In South Jersey and Philadelphia, that increased demand can lead to bidding wars and rising prices, even if rates are improving.

That’s why waiting for rates to drop further can backfire. A slightly higher rate on a lower-priced home is often better than a lower rate on a home that’s now far more expensive due to competition. For buyers who are financially ready, buying before demand fully ramps up can be the smarter move. Refinancing later is possible. Re-buying at yesterday’s price isn’t.

If you’re already holding property in South Jersey or Philly, January’s rate moves cut both ways:

Homeowners who locked in a mortgage at 5% or lower are still way ahead of today’s rates. That “lock-in effect” has kept a lot of would-be sellers on the sidelines for years—because why give up a low rate and take a higher one on a new home? That dynamic helped suppress inventory.

But with rates trending a bit lower, more sellers might feel comfortable moving, especially if they want to upsize or relocate. That’s healthier for the market overall—more listings means more choices for buyers, and a more balanced market.

Philadelphia’s housing market is slowly balancing after years of super-tight conditions. Inventory has crept up, and price growth has slowed—giving buyers some leverage again.

That’s crucial because affordability was a real barrier for many would-be Philly buyers. Higher mortgage costs pushed some renters to keep renting, and some first-time buyers were simply priced out. January’s slight rate drops haven’t solved affordability problems, but they do make the monthly payment math less punishing. That’s how buyers who were once priced out now feel like they can at least get in the game.

January 2026 didn’t bring rock-bottom rates. It did bring something arguably better and healthier for the housing market as a whole: clarity and a bit of relief. Mortgage rates moving into the mid-to-low-6% range has:

For South Jersey and Philadelphia, that’s the kind of subtle shift that feels like progress—even if the era of ultra-cheap money is long gone. If you've got questions about buying or selling in this market, don't hesitate to reach out: