Mortgage Rates Forecast For 2026: Experts Predict Whether Rates Will Keep Dropping
Mortgage Rates Forecast For 2026: Mortgage rates remained in the upper-6% range through most of 2025 due to persistent inflation and a cautious Federal Reserve. Conditions began to change later in the year when the Fed signaled a shift toward easing policy. Rates started declining before the September 2025 rate cut and continued to fall ahead of the October meeting as markets anticipated further action.
In December 2025, the Federal Reserve delivered its third consecutive rate cut, lowering the federal funds rate to a range of 3.50% to 3.75%. However, at the January 2026 meeting, policymakers paused further cuts to evaluate how previous reductions were affecting the economy.
Even with this pause, mortgage rates continued to decline. As of January 29, 2026, the average 30-year fixed mortgage rate was 6.18%, down from the mid-6% range seen earlier. This decline raised questions about whether rates will continue falling in the coming months.
Federal Reserve Holds Interest Rates Steady
On January 28, 2026, the Federal Open Market Committee (FOMC) decided to maintain the benchmark federal funds rate at 3.50% to 3.75%, ending a series of rate cuts made in September, October, and December 2025.
The decision was not unanimous. Federal Reserve governors Stephen Miran and Christopher Waller supported an additional 25 basis point cut, showing disagreement among policymakers. However, the majority voted to pause and assess economic conditions.
The federal funds rate influences borrowing costs across the economy, including mortgages and loans. The Fed’s decision reflects a cautious approach as officials evaluate inflation, employment, and economic growth.
Will the Fed Continue Cutting Rates?
Federal Reserve Chair Jerome Powell stated that the economy expanded at a solid pace and entered 2026 on stable footing. He emphasized that future decisions will depend on economic data.
Inflation remained at 2.7% in December, still above the Fed’s target of 2%. While unemployment has stabilized, job gains have remained limited. At the December meeting, officials projected only one additional rate cut in 2026, suggesting a slower pace of easing.
Impact on Mortgage Rates and Homebuyers
Mortgage rates declined despite the Fed’s pause. As of late January 2026, the average 30-year fixed mortgage rate stood at 6.18%, while 15-year mortgage rates were 5.40%. This marked improvement compared to the higher rates seen in late 2023 and early 2025.
Mortgage rates are influenced more closely by the 10-year Treasury yield than by the federal funds rate. These yields move based on investor expectations about inflation and economic growth.
Government actions also played a role. A directive required Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities, which contributed to downward pressure on rates.
Lower rates can reduce monthly mortgage payments, but affordability also depends on home prices and individual financial conditions.
Should Buyers Wait for Lower Mortgage Rates?
Some experts warn that waiting for lower rates may increase competition. If rates decline further, more buyers could enter the market, which may lead to higher home prices.
Upcoming Federal Reserve Meetings in 2026
- March 17–18, 2026
- April 28–29, 2026
- June 16–17, 2026
- July 28–29, 2026
- September 15–16, 2026
- October 27–28, 2026
- December 8–9, 2026
The Fed will review inflation, employment, and economic growth at each meeting before making decisions on interest rates.
Mortgage Rate Predictions for 2026
NAR Forecast
The National Association of Realtors expects mortgage rates to remain in the mid-6% range and possibly decline to around 6% in 2026.
Zillow Home Loans Forecast
Zillow expects mortgage rates to remain between 6% and 7% due to inflation risks and labor market conditions.
Fannie Mae Forecast
Fannie Mae forecasts mortgage rates to reach 6.3% and potentially decline to 5.9%.
Mortgage Bankers Association Forecast
The Mortgage Bankers Association expects mortgage rates to average around 6.4% and remain steady in early 2026.
Redfin Forecast
Redfin economists do not expect significant declines, as rate cuts have already been reflected in market pricing.
Refinancing Outlook
Refinancing activity increased after mortgage rates declined following the Fed’s rate cuts. However, refinancing decisions depend on the borrower’s current mortgage rate and financial situation.
It is important to consider closing costs and how long you plan to stay in the home before refinancing.
How To Get the Best Mortgage Rate
- Monitor mortgage rate trends regularly.
- Check your credit score before applying.
- Compare multiple lenders.
- Evaluate loan terms carefully.
Frequently Asked Questions (FAQ)
1. Will mortgage rates drop in 2026?
Mortgage rates may decline slightly in 2026, but experts expect them to remain near the 6% range depending on inflation and Fed policy.
2. What is the current mortgage rate in 2026?
The average 30-year fixed mortgage rate is around 6.18%, while the 15-year rate is about 5.40%.
3. Can mortgage rates go below 6%?
Rates could approach or drop below 6% if inflation decreases and the Federal Reserve cuts interest rates further.
4. Should buyers wait for lower mortgage rates?
Waiting can increase competition and home prices, so buyers should decide based on affordability and financial readiness.
5. What affects mortgage rates?
Mortgage rates depend on inflation, Federal Reserve decisions, economic growth, and Treasury yields.
