2026 Mortgage Rate Forecast: Where Rates May Go Next

2026 Mortgage Rate Forecast at a Glance

Mortgage-rate forecasts can change quickly as new economic information becomes available. Rather than treating a single forecast number as a prediction, it is more useful to understand the range of possible outcomes and the economic conditions that could produce them.

National mortgage-rate averages and forecasts are not quotes or offers from Metropolitan Mortgage Corporation. Actual mortgage rates vary based on borrower qualifications, loan program, property, loan-to-value ratio, points, lock period, and market conditions.

What Are Experts Forecasting for Mortgage Rates in 2026?

Industry forecasts are useful for understanding the expected direction of mortgage rates, but they should not be viewed as guarantees. Economic forecasts are revised as inflation, employment, economic growth, Treasury yields, and financial-market conditions change.

Fannie Mae Mortgage Rate Forecast

Fannie Mae's July 2026 Housing Forecast projects the average 30-year fixed mortgage rate at approximately 6.4% during both the third and fourth quarters of 2026. Its forecast calls for a 2026 annual average of approximately 6.3%.

The forecast suggests gradual improvement rather than a rapid return to the unusually low mortgage rates experienced earlier in the decade.

Mortgage Bankers Association Mortgage Rate Outlook

The Mortgage Bankers Association also publishes regular mortgage-finance forecasts. Like Fannie Mae, MBA's outlook should be viewed as a changing economic projection rather than a precise prediction of the rate that will be available to an individual borrower.

The broader industry consensus entering the second half of 2026 remains consistent with mortgage rates staying relatively elevated, with meaningful improvement dependent on lower inflation and declining longer-term Treasury yields.

Freddie Mac: What Mortgage Rates Are Actually Doing

Freddie Mac's Primary Mortgage Market Survey is different from an economic forecast. It measures national mortgage-rate averages based on mortgage applications submitted by lenders across the country.

Freddie Mac reported a national average 30-year fixed mortgage rate of 6.69% and a 15-year fixed rate of 6.01% for the week ending August 6, 2026. The 30-year average increased from 6.66% the prior week.

Our Base-Case Mortgage Rate Outlook for the Rest of 2026

Based on current mortgage-market conditions, Treasury yields, inflation risk, and major industry forecasts, our base case is that mortgage rates are more likely to remain range-bound around the mid-to-upper 6% area than experience a dramatic decline during the remainder of 2026.

Rates can still move meaningfully in either direction. Rather than relying on one specific year-end prediction, we believe borrowers should consider three possible scenarios.

This outlook represents Metropolitan Mortgage Corporation's interpretation of current economic and mortgage-market information and should not be considered a guarantee of future mortgage rates.

Why Mortgage Rates Remain Elevated in 2026

Mortgage rates are influenced by far more than Federal Reserve decisions. One of the most important market indicators is the yield on the 10-year U.S. Treasury note.

As of August 10, 2026, the 10-year Treasury constant maturity yield was approximately 4.72%. Higher Treasury yields generally create upward pressure on mortgage rates because investors typically require an additional yield premium to own mortgage-backed securities.

Several factors can keep longer-term interest rates elevated:

• Persistent inflation
• Strong employment and wage growth
• Resilient consumer spending
• Higher energy prices
• Federal budget and Treasury-supply concerns
• Changing Federal Reserve expectations
• Investor demand for mortgage-backed securities
• Global economic and geopolitical uncertainty

What Could Make Mortgage Rates Fall in 2026?

Mortgage rates could move lower during the remainder of 2026, but meaningful improvement would likely require several economic conditions to move in the right direction.

Inflation Continues to Cool

Inflation is one of the most important forces affecting longer-term interest rates. When investors become more confident that inflation is moving sustainably lower, Treasury yields can decline, which may help mortgage rates improve.

Employment and Economic Growth Slow

A softer labor market or slower economic growth can increase expectations for easier monetary policy and reduce upward pressure on long-term bond yields.

The 10-Year Treasury Yield Declines

Mortgage rates tend to be more closely connected to longer-term bond-market movements than to the Federal Reserve's overnight policy rate. A sustained decline in the 10-year Treasury yield would generally be favorable for mortgage pricing.

Mortgage-Backed Securities Spreads Improve

Mortgage rates do not move exactly one-for-one with Treasury yields. Investors also require compensation for risks unique to mortgage-backed securities, including the possibility that homeowners refinance or repay mortgages early.

If investor demand for mortgage-backed securities improves and the spread between mortgage rates and Treasury yields narrows, borrowers could see better mortgage pricing even without a dramatic decline in Treasury rates.

What Could Push Mortgage Rates Higher?

The outlook is not one-sided. Several developments could keep rates elevated or push them above current levels.

• Inflation reaccelerates: Persistent inflation can cause investors to demand higher bond yields.
• Economic growth remains strong: Stronger economic activity can keep long-term rates elevated.
• Employment remains unusually resilient: A strong labor market may reduce expectations for easier monetary policy.
• Treasury yields increase: Higher long-term Treasury yields typically pressure mortgage rates higher.
• Energy prices rise: Higher energy costs can contribute to renewed inflation concerns.
• Mortgage spreads widen: Reduced investor demand for mortgage-backed securities can increase mortgage pricing independently of Treasury movements.

Will the Federal Reserve Lower Mortgage Rates?

The Federal Reserve does not directly set 30-year fixed mortgage rates. This is one of the most important distinctions for borrowers trying to understand mortgage markets.

The Federal Reserve sets a target range for the federal funds rate, which is a short-term interest rate. Mortgage rates, particularly 30-year fixed rates, are influenced much more directly by longer-term bond yields and mortgage-backed securities markets.

For example, the effective federal funds rate was approximately 3.63% on August 10, 2026, while the 10-year Treasury yield was approximately 4.72%. The difference illustrates why a Federal Reserve rate decision should not be interpreted as an equivalent change in mortgage rates.

Review upcoming policy dates on our Federal Reserve meeting schedule .

Will Mortgage Rates Go Below 6% in 2026?

Mortgage rates falling below 6% during 2026 is possible, but it is not our base-case expectation.

A temporary move below 6% and a sustained period below 6% are also very different outcomes. For mortgage rates to remain below that level, the market would likely need to see a meaningful combination of:

• Lower inflation readings
• Lower long-term Treasury yields
• Softer employment conditions
• Slower economic growth
• Improved mortgage-backed securities spreads

Fannie Mae's July 2026 forecast currently projects the 30-year fixed mortgage rate averaging approximately 6.4% during the fourth quarter of 2026, so a sustained sub-6% environment is not currently its central forecast.

Could Mortgage Rates Return to 5% in 2026?

A sustained return to mortgage rates in the 5% range during 2026 would require a much larger improvement in bond-market conditions than current mainstream forecasts anticipate.

That does not make a 5% mortgage rate impossible. Mortgage markets can move quickly when economic expectations change. However, borrowers should be cautious about basing a purchase or refinance decision on the assumption that rates will soon return to levels substantially below current forecasts.

What Is the Mortgage Rate Forecast for 2027?

Current forecasts suggest mortgage-rate improvement may remain gradual into 2027 rather than producing a sudden decline.

Fannie Mae's July 2026 Housing Forecast projects the average 30-year fixed rate at approximately 6.3% during the first three quarters of 2027 and approximately 6.2% during the fourth quarter.

These longer-range forecasts are especially uncertain. The 2027 outlook will likely be revised multiple times as inflation, employment, Federal Reserve policy, Treasury yields, and housing-market conditions evolve.

Should You Wait for Mortgage Rates to Fall Before Buying?

Waiting for a lower mortgage rate can reduce borrowing costs if rates actually decline, but the mortgage rate is only one part of a home-purchase decision.

Buyers should also consider:

• Whether the current monthly payment is affordable
• Available cash reserves after closing
• Home prices in the desired area
• Available housing inventory
• Seller negotiating leverage
• Expected time in the home
• Rent or other housing costs while waiting
• The possibility of refinancing later if rates decline

Lower mortgage rates can also attract additional buyers into the market. If rates fall, increased buyer demand could result in greater competition for desirable properties. For that reason, waiting for a lower rate does not automatically guarantee a better overall home-buying outcome.

Should Homeowners Wait to Refinance?

A refinance decision should generally be based on your actual financial benefit rather than waiting for mortgage rates to reach an arbitrary number.

Important considerations include:

• Your current mortgage rate
• The rate and APR available on the new mortgage
• Remaining loan balance
• Closing costs
• Monthly payment savings
• Break-even period
• Remaining loan term
• Whether the refinance resets your amortization period
• Cash-out or debt-consolidation objectives

Explore our Kansas City mortgage refinance options or use our refinance calculator to evaluate potential savings.

Lock or Float? What the 2026 Forecast Means for Borrowers

A mortgage-rate forecast can provide context, but it cannot determine whether an individual borrower should lock or float. That decision depends on your closing timeline, available pricing, financial goals, and tolerance for market risk.

Learn more in our mortgage rate lock guide .

What the 2026 Mortgage Rate Forecast Means for Kansas City Buyers

Kansas City-area buyers experience the same national mortgage-market forces affecting borrowers across the country, but the effect of mortgage rates on an individual transaction also depends on local home prices, property taxes, homeowners insurance, inventory, and the borrower's financing structure.

A higher mortgage rate reduces purchasing power when all other variables remain the same. However, buyers should evaluate the entire monthly housing payment rather than mortgage rate alone.

Kansas and Missouri properties may have different property-tax and insurance characteristics, while individual communities throughout the Kansas City metro can have materially different home prices and inventory conditions.

How Much Does a Mortgage Rate Change Affect Your Payment?

Mortgage-rate movements that appear small can have a meaningful impact on monthly payments, particularly on larger loan balances.

The following example compares the principal and interest payment on a hypothetical $400,000, 30-year fixed mortgage.

Illustrative principal-and-interest calculations only. The rates shown above are hypothetical examples and are not current rate quotes or offers. Payments exclude property taxes, homeowners insurance, mortgage insurance, HOA dues, and other housing costs.

2026 Mortgage Rate Forecast FAQs

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