"Mortgage rates are expected to dip below 6% by the end of 2026, a level not seen in three years, according to Fannie Mae's latest projections. This shift is anticipated to impact the housing market and affordability for potential homebuyers. The downward trend in rates is influenced by various factors including the Federal Reserve's interest rate decisions, inflation data, and market movements."
"Fannie Mae foresees mortgage rates dropping to 5.9% by the end of 2026, a significant decrease from the current 6.4% average. Mortgage rates, closely tied to the 10-year Treasury yield, are expected to rise slightly by the end of the year, potentially reaching around 6.4%. The housing market's affordability challenges persist, with Fannie Mae revising down projections for total home sales in 2025 and 2026."
Fannie Mae projects mortgage rates will fall to 5.9% by the end of 2026, down from the current average of about 6.4%. Rates remain closely linked to the 10-year Treasury yield and could rise slightly to roughly 6.4% by year-end before declining. Declining mortgage rates are expected to influence housing market activity and improve affordability for some buyers, but significant affordability challenges will persist. Fannie Mae lowered its forecasts for total home sales in 2025 and 2026. Restoring affordability levels seen from 2016–2019 would require large decreases in home prices, substantial household income gains, or much lower mortgage rates.
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