Mortgage Rates Today, Jan 12: 30-Year Refinance Rate Drops by 7 Basis Points

Here's today's update on mortgage refinance rates. For January 12th, the average 30-year fixed refinance rate has seen a decrease of 7 basis points, bringing it down from last week's average of 6.51% to a more inviting 6.44%. This is a tangible number, and for those of you considering refinancing, it's a significant positive development.

Mortgage Rates Today, Jan 12: 30-Year Refinance Rate Drops by 7 Basis Points

Key Takeaways:

• The average 30-year fixed refinance rate dropped by 7 basis points to 6.44% as of January 12, according to Zillow.
• This move signals a positive shift for homeowners looking to lower their monthly payments.
• Refinance applications are seeing a significant uptick, with a 27% increase week-over-week.
• Government intervention and economic indicators are the primary drivers behind this rate decrease.

What Exactly Does That 7 Basis Point Drop Mean?

Let’s break down what a “basis point” really signifies. In the world of finance, a basis point is the smallest unit of measurement for interest rates. One basis point is equal to 0.01% (or 1/100th of a percent). So, a drop of 7 basis points means the average rate has fallen by 0.07%.

While that might sound small, let’s put it into perspective. If you have a mortgage of, say, $300,000, a 0.07% difference in your interest rate can translate to about $15 to $20 less in your monthly payment. Over the lifetime of a 30-year loan, those savings can add up considerably. It’s not a dramatic change that will instantly cut your mortgage in half, but it's a meaningful step in the right direction for many households.

A Deeper Look at Today's Mortgage Rates

Zillow's latest report for January 12th paints a clear picture of the current market:

As you can see, the 15-year fixed refinance rate has seen an even more substantial drop, falling by 21 basis points from 5.46% to 5.25%. This makes the 15-year option significantly more attractive for those who can manage the higher monthly payments, as it can lead to substantial savings in interest over time. The 5-year Adjustable-Rate Mortgage (ARM) rate, however, remained steady at 7.32% for now.

30-Year vs. 15-Year Refinance: Which is Right for You?

This is a question I get asked a lot, and the answer truly depends on your personal financial situation and goals.

• The 30-Year Fixed Refinance: This is the most popular choice for a reason. It offers the lowest monthly payment. If your primary goal is to reduce your current monthly outflow, the 30-year is likely your best bet. It gives you more breathing room in your budget, which can be invaluable if you have other financial priorities or are looking to increase your cash flow. The longer term means you spread out your payments over a longer period.
• The 15-Year Fixed Refinance: This option comes with a higher monthly payment, but the benefits are powerful.
  • Lower Interest Rate: As we've seen today, 15-year rates are typically lower than 30-year rates.
  • Faster Equity Building: You'll pay off your mortgage in half the time, building equity much more rapidly.
  • Significant Interest Savings: Over the life of the loan, you can save tens, even hundreds, of thousands of dollars in interest compared to a 30-year loan.

My take: If you can comfortably afford the higher monthly payments of a 15-year refinance, and your goal is to become debt-free sooner and save a massive amount on interest, it's almost always the smarter financial move. The current drop in 15-year rates makes this an even more compelling proposition right now. However, if a lower monthly payment is a necessity for your budget, the 30-year refinance is still a great way to potentially lower your current housing cost.

Refinance Demand Skyrockets: The Market is Reacting!

These rate drops aren't happening in a vacuum. Borrowers are definitely taking notice, and the data proves it. Zillow reports a significant surge in refinance applications:

• Week-over-Week Surge: For the week ending January 2, 2026, refinance applications jumped by a remarkable 27%. This is a clear indicator that homeowners are actively looking to capitalize on these lower rates.
• Annual Growth: Looking at the bigger picture, demand in dollar volume is up an astounding 99% compared to the same week last year. This tells me that the market is not just recovering; it's experiencing a powerful rebound in refinancing activity.

I've spoken to many lenders, and they're seeing this firsthand. The phones are ringing, and online portals are buzzing with activity. People who may have been sitting on the sidelines are now feeling the urgency to lock in a better rate before they potentially tick back up.

Who is Rushing to Refinance?

The data suggests that approximately 20% of current mortgaged homeowners are holding onto rates above 6%. These are the folks who are most motivated to refinance. When rates dip into the high 5% range, as they are now, it creates a powerful incentive for them to act. They're the ones who stand to see the most immediate and significant savings, making them prime candidates for refinancing.

What's Driving These Falling Rates?

It’s not just happenstance. There are significant forces at play pushing mortgage rates lower. I've identified a few key market drivers:

1. Government Intervention: A Strategic Move
   On January 9, 2026, President Trump issued an executive order for the purchase of $200 billion in mortgage-backed securities (MBS). This is a direct intervention aimed at injecting liquidity into the mortgage market and, consequently, driving down borrowing costs for consumers. When the government buys MBS, it increases demand for these securities, which in turn pushes their prices up and yields (interest rates) down. It’s a powerful tool to influence the mortgage market, and we're seeing its effect.
2. Economic Indicators: The Jobs Report Effect
   In early January, the latest jobs report came in weaker than anticipated. A slower-than-expected job growth can signal that the economy might be cooling down. In response to weaker economic data, the Federal Reserve (or, in this case, the government's intervention is directly impacting) often looks to lower interest rates to stimulate growth. This weaker jobs report provided further downward pressure on interest rates across the board, including mortgage rates.
3. The 2026 Forecast: A “Great Housing Reset”
   The outlook for 2026 is optimistic for the housing market, with many experts anticipating a “Great Housing Reset.” This forecast suggests a year of increased housing activity and, importantly, a significant rise in refinance volumes. Experts predict refinance volumes to increase by over 30% annually as the year progresses. This is fantastic news for homeowners looking to benefit from a competitive lending environment.

My Thoughts on the Market Direction

From my perspective, this current dip in rates isn't just a temporary blip. While interest rates can be notoriously difficult to predict long-term, the combination of deliberate government action and economic signals suggests a sustained period of relatively lower borrowing costs. The $200 billion MBS purchase is a significant commitment, and it signals a clear intent to keep mortgage rates accessible.

For homeowners who have been waiting for the right moment to refinance, I genuinely believe that now is a very opportune time to explore your options. It’s crucial to shop around with multiple lenders, as rates can vary, and to get personalized quotes based on your credit score and financial situation. Don't let this opportunity pass you by. Taking action now could lead to significant savings and improved financial well-being for years to come.