Economists at Fannie Mae are now predicting higher mortgage rates at the end of 2026 and into 2027. Currently, the average rate on the 30-year remains at 7.4% for the fourth quarter of this year and 7.5% for all of next year. It previously forecast 6.8% for the fourth quarter and 6.7% for the whole year ahead.
The average rate on the 30-year remained at 7.46% Tuesday, according to Mortgage News Daily, but will be higher today. Bond yields rose after a hotter-than-expected inflation report.
An aerial view of a single-family home on a street on April 2, 2026 in Thousand Oaks, California.
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Mortgage rates have risen sharply since the start of September, as inflation remains high and the bond market has sold off due to a number of factors. The Federal Reserve also raised its benchmark rate for the first time in more than three years. Mortgage rates don’t follow Fed rates exactly, but they do react to how the central bank sees inflation going forward.
Mortgage rates have easily trailed the yield on the 10-year Treasury, which has risen sharply due to higher oil prices and worries about the global economy.
Higher rates have caused the housing market to freeze earlier this fall. Pending sales, calculated by signed contracts on existing homes, fell 8.5% in September year over year, according to Zillow. Mortgage demand continues to fall sharply, as buyers face higher prices and weaker affordability. Not only are fewer buyers now able to afford a home, but fewer are able to get a mortgage.
Fannie Mae did not respond to a request for comment on the latest forecast.