Mortgage Rate Forecast of 2026
Mortgage rates remained in the mid-6% range for much of 2025, keeping affordability tight and many buyers on the sidelines. As of December, 2025 the average 30 year fixed rate mortgage rate was 6.21% and today’s mortgage rates have been largely unchanged since the Federal Reserve cut the federal funds rate in late 2025. Although they remain well below the peaks seen in late 2023, elevated borrowing costs continue to weigh on home sales, refinances and overall housing activity. The housing market continues to see high demand and low inventory which keeps home prices elevated and affordability challenging for first time home buyers.
This guide below provides an updated forecast for mortgage rates in 2026 to help homebuyers, homeowners and those considering refinancing make informed decisions about their mortgage. Mortgage rate forecasts for 2026 shows rates are likely to remain in the low to mid 6% range with gradual improvement in the months ahead. Having a sense of where mortgage rates are headed can help with affordability and financial planning whether you’re a first time home buyer, refinancing or deciding whether to stay with your current mortgage.
2026 Mortgage Rate Forecast Summary
Here’s a quick overview of the main 2026 mortgage rate forecasts from leading organizations:
| 2026 Forecast for 30 Year Fixed | |
|---|---|
| Fannie Mae | 5.9% |
| Mortgage Bankers Assoc. | 6.4% |
| National Assoc. of Realtors | 6.0% |
Introduction to Mortgage Rates
One of the most important factors influencing the housing market and the choices of prospective buyers is the mortgage rate. Mortgage rates are primarily determined by the federal funds rate set by the Federal Reserve, the nation’s central bank. When the Fed raises or lowers this rate in response to inflationary pressures or economic stimuli it directly impacts the cost of borrowing across the mortgage market. However, it’s important to note that this is not the sole factor influencing mortgage rates. Other key elements, including economic growth, inflationary trends and the level of investor demand for mortgage backed securities also play significant roles in shaping the market rates.
The Role of the 10 Year Treasury Yield
The 10 year Treasury yield is a benchmark interest rate that influences mortgage rates. Mortgage rates tend to follow the movement of the 10 year Treasury yield and so when the Federal Reserve increases or decreases rates, mortgage rates generally follow suit. However, the spread between mortgage rates and the 10 year Treasury yield can also influence the rates offered to mortgage borrowers. If the spread widens or narrows it can impact the affordability of a mortgage. The Federal Reserve’s monetary policy and signals regarding future cuts to the Fed Funds Rate are also vital factors for determining mortgage rates.
Types of Mortgage Loans
In addition to these economic indicators, the current market is also characterized by a diverse array of loan types each with its own set of features and benefits. From fixed rate mortgages that offer stability and predictability to adjustable rate mortgages (ARMs) that may start lower but fluctuate over time the variety of options can seem overwhelming. Government backed loans such as FHA loans and USDA loans have been developed to help more buyers qualify, often with lower down payment requirements or more flexible credit standards.
Navigating these choices can be a daunting task for many, which is why the assistance of a knowledgeable loan officer is invaluable. A professional loan officer can help you compare lenders, understand the nuances of different loan types and identify the best lender for your unique needs. Whether you are a first time home buyer or a seasoned homeowner looking to refinance, having a comprehensive understanding of how mortgage rates work is the first step towards making a confident decision in today’s market.
Why Are Mortgage Rates Still Elevated?
Mortgage rates are still much higher than the historical norm for a variety of reasons including:
- Inflation Progress, Not Perfection. While inflation has come down from its peak it remains well above the Federal Reserve’s 2% long term target and there is a long way to go before rates can truly fall aggressively. Mortgage rates tend to rise with high inflation and persist until inflation is under control to maintain the value of lenders’ returns.
- Resilient Economy and Labor Market. Continued job growth and consumer spending have reduced the urgency for rapid rate cuts. A strong economy with low unemployment typically pushes mortgage rates higher, while signs of a recession can lower rates.
- Global Uncertainty. Geopolitical risks and global economic instability continue to add a risk premium to long-term interest rates.
When Will Interest Rates Go Down?
Most forecasts suggest that any meaningful rate relief will be slow and incremental, stretching through 2026 rather than happening all at once. Recent mortgage rate predictions from chief economists and senior economists at major organizations, such as Freddie Mac, Fannie Mae, and the National Association of Realtors, indicate a cautious outlook for the coming years. Here’s where leading organizations currently see rates heading:
| 2026 Forecast | 2027 Forecast | |
|---|---|---|
| Fannie Mae | 5.9% | 5.9% |
| Mortgage Bankers Assoc. | 6.4% | 6.3% |
| National Assoc. of Realtors | 6.0% | 5.9% |
Fannie Mae. Fannie Mae forecasts a gradual cooling in mortgage rates and predicts the 30 year fixed rate to drop to around 5.9% by late 2026 and hold steady through 2027 with purchase mortgage originations picking up significantly driven by increased home sales and more affordable conditions. While rates fall, home price growth slows slightly in 2026 before picking up again in 2027, with overall market activity rebounding.
Mortgage Bankers Association (MBA). The MBA sees a plateau rather than a significant rally for lower rates in the near term with 2026 and 2027 looking similar, potentially making the current rates the near term floor for a while. The MBA forecasts 30 year fixed mortgage rates to hover around 6.4% throughout 2026 with a slight dip to about 6.3% in 2027, suggesting rates have found their floor and will remain in the low-to-mid 6% range due to economic factors like slower growth, inflation and budget deficits. Affordability is expected to slightly improve as house price growth slows but rates aren’t anticipated to drop significantly below 6% soon.
National Association of Realtors. The National Association of Realtors’ senior economist projects mortgage rate predictions to settle at 6% in 2026 and 5.9% in 2027, reflecting expectations for a stable rate environment as inflation moderates and the housing market adjusts.
Why Mortgage Rates Could Ease in 2026
Mortgage rates don’t move exactly with Fed cuts but Fed policy still matters because it influences bond yields and investor expectations. The Federal Reserve's October meeting and December meeting in 2025 resulted in policy decisions that shaped the direction of interest rates for the coming year. The Fed cut its benchmark federal funds rate three times in 2025 which has influenced mortgage rates. These rate cuts were aimed at supporting economic growth and employment while inflation showed signs of moderating. The Fed’s late 2025 communications and rate projections pointed to additional easing ahead although at a measured pace.
The bond market tends to reward sustained progress on inflation with lower long-term yields. When the Federal Reserve adjusts its policy rates, it directly affects the front end of the yield curve, which can lead to changes in mortgage rates as well. Several mainstream outlooks assume inflation keeps moving closer to the Fed’s target over 2026 which supports the case for slightly lower mortgage rates than 2025.
Three Possible Scenarios for 2026
Scenario A: Soft Landing (most common scenario)
- Growth slows but avoids a deep recession
- Inflation gradually cools
- Rates drift lower overall
- What rates could look like: high 5s to low 6s by late 2026 (consistent with forecasts like Fannie Mae 5.9%)
Scenario B: Stuck Inflation
- Inflation proves sticky
- Fed cuts less than markets want
- Rates stay in a narrow range
- What rates could look like: mostly low to mid 6s (consistent with more cautious forecasts near 6.4%)
Scenario C: Clear Downturn
- Unemployment rises more quickly
- The Fed cuts faster
- Rates fall more meaningfully
- This scenario can push mortgage rates down faster but it typically comes with more economic stress as job security becomes a bigger factor than rate shopping
Regional Housing Markets
While national mortgage rates set the tone for the overall housing market, local conditions can have a significant impact on what buyers experience in different regions. In states like Colorado and along the East Coast, factors such as job growth, housing supply and local economic trends can influence both home prices and the availability of mortgage products.
In Colorado, the strong job market and consistent population growth have continued to fuel homebuyer demand despite changes in mortgage rates. This means the home prices are on the rise due to increased demand so sellers have the luxury of multiple buyers making offers on their property. Buyers need to move fast and show proof of pre-approval when the right property comes on the market. On the East Coast, the housing markets can be more mixed depending on the cities and towns with some showing more stable home prices while others experience fast appreciation or a glut of inventory.
The conforming loan limit set by the Federal Housing Finance Agency varies by region as well. These limits change annually and are based on the average home prices in a specific area. In high cost regions the conforming loan limit is higher which allows you to borrow more money without having to apply for a jumbo loan. The cost of living including local property taxes, insurance costs and even closing costs can also vary by region affecting the overall cost of owning a home in a particular area.
Staying informed about your local housing outlook and working with a lender who understands local market trends can make a big difference. Alpine Mortgage offers personalized guidance tailored to the unique conditions in your local housing market, helping you navigate the regional factors that matter most in your home search.
Mortgage Rate Shopping Strategies
Securing the best mortgage rate and loan terms requires more than just watching the headlines. It takes a strategic approach to shopping and comparing lenders. In today’s mortgage market where rates can change from week to week, being proactive and informed is key to getting a good deal.
Steps to Secure the Best Mortgage Rate
Check Your Credit Score. Start by checking your credit score, as higher FICO scores typically qualify for lower interest rates and better loan options.
Determine Your Down Payment. Next, determine how much you can afford for a down payment as putting more money down can help you avoid private mortgage insurance (PMI) and reduce your monthly payment.
Compare Lenders. When comparing lenders don’t just focus on the advertised rate. Look at the origination fees and loan costs. Ask each lender for a loan estimate so you can compare the true cost of different offers side by side.
Consider Loan Types. Consider both fixed rate loans and adjustable rate mortgages especially if you plan to move or refinance in the near future.
Timing Your Rate Lock. Timing can also play a role. While it’s impossible to predict the exact week when mortgage rates will drop, locking in a rate when you find a favorable offer can protect you from future increases. If you’re not ready to buy, keep an eye on market trends and be prepared to act quickly when conditions improve.
Work with an Experienced Loan Officer. Finally, work with a loan officer who can guide you through the process, answer your questions and help you find the best lender for your needs. At Alpine Mortgage we’re committed to helping you compare lenders, understand your options and secure a mortgage that fits your goals whether you’re buying your first home or refinancing for a better rate.
Conclusion
The outlook for mortgage rates suggests a period of gradual improvement rather than dramatic change. While rates are expected to remain above the historic lows seen in recent years, most forecasts point to slightly lower and more stable borrowing costs as inflation eases and the Federal Reserve adopts a more neutral stance. For buyers and homeowners, this means more predictable conditions and potential opportunities to refinance or purchase as the market evolves.
Navigating the mortgage process in today’s market requires careful planning, a clear understanding of your options and the support of a trusted lender. At Alpine Mortgage, we’re dedicated to helping you make sense of the changing landscape whether you’re buying your first home, refinancing or exploring specialized loan programs. With our local expertise, competitive rates and personalized service, we’re here to guide you every step of the way.
Ready to take the next step? Contact Alpine Mortgage Services to compare lenders, explore your loan options, and secure the right mortgage for your future.
Mortgage Rates Forecast FAQs
It’s possible but unlikely. Rates below 5% would likely require a significant economic slowdown or recession that forces aggressive Federal Reserve rate cuts. While that scenario exists, most mainstream forecasts do not assume sub 5% rates in 2026.
Mortgage rates are driven more by long term bond yields, especially the 10 year treasury, than by the Fed’s short term rate. Investors price mortgages based on inflation expectations, economic risk and mortgage backed security demand and not just Fed announcements.
Most projections suggest slightly lower average rates in 2026 compared to 2025, but with ongoing volatility. Rather than a straight decline rates are expected to move in cycles responding to inflation data, labor market reports and global events.
For many homeowners, yes especially if rates dip into the high 5% range. Borrowers who took out loans at higher 6% or 7% rates in prior years may see refinance opportunities if spreads improve and rates trend lower, even modestly. Refinancing comes with closing costs so it's important you're in the home long enough to recover those costs and start saving from the lower rate. A cash out refinance can also be a useful strategy for accessing cash flow or consolidating debt, even if you already have a low mortgage rate.
Trying to time the exact bottom of rates is risky. Experts caution that waiting for mortgage rates to drop further can be a risky strategy. In many cases, buyers benefit more from purchasing when inventory and pricing are favorable and refinancing later if rates improve. A lower purchase price with a refinance strategy can be more effective than waiting indefinitely for the “perfect” rate.
On a $500,000 loan, a 0.50% rate change can shift the monthly payment by roughly $150–$170, depending on term and taxes. Over time, even small rate movements can have a meaningful impact on total interest paid.
Yes. Mortgage rates and home prices don’t move in lockstep. Rates respond to capital markets while prices are driven by supply, demand and local conditions. It’s possible to see stable or rising prices even as mortgage rates ease.
If mortgage rates continue on a downward trajectory more buyers will likely enter the market after being priced out on the sidelines, as seen by an increase in purchase applications. Lower rates can stimulate demand even in a high price environment.
The single most important factor is sustained progress on inflation. If inflation trends consistently closer to the Federal Reserve’s target long term bond yields may fall which would place downward pressure on mortgage rates.
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