2026 Mortgage Rate Predictions: Will Rates Fall?

For mortgage shoppers and refinance-seeking homeowners alike, the lending climate in 2025 has proved challenging, with typical interest rates hovering between 6.25% and 7% – discouraging many from pulling the trigger on purchase and refi loans this year.

As 2026 comes into view, the big question remains: Where do rates go from here? Buyers weighing affordability and homeowners eyeing a refinance seek answers and recommendations on how to proceed. For insights and prognostications on where rates will land next year, we turned to several trusted housing market professionals.

Where rates stand today

Taking a closer look at rates for the benchmark 30-year fixed-rate home loan, there are actually signs of optimism lately. Rates hit a peak for the year in early January at just above 7%, dipped down to about 6.62% by early spring, then seesawed back up and down across the next few months before beginning a steady downward trend between late July and late September.

At the time of this writing, mortgage rates are averaging 6.27%, according to the Federal Reserve Bank of St. Louis. Meanwhile, the average 15-year fixed mortgage rate currently sits at 5.52%. Consider that the average 30-year fixed rate mortgage hit a record weekly low of 2.65% back in early 2021, versus a record high of 18.63% back in October 1981.

Examining the existing mortgage climate

Raw stats alone only scratch the surface, however. To truly understand the bigger rate and financing picture, let’s hear what our respected panel of real estate experts had to say.

Kenon Chen, executive vice president, Strategy and Growth, Clear Capital: “Mortgage rates have come down to the low 6% range, with the Federal Reserve voting on a 25 basis point in September. While there remains some uncertainty for inflation due to trade policy, the weakening of the labor market seems to indicate that more cuts could be coming this year.”

Nadia Evangelou, senior economist and director of real estate research, National Association of Realtors: “As we close out 2025, 30-year mortgage rates are hovering around the low-6s and 15-year rates around the mid-5s. Rates have eased as the Federal Reserve shifted from ‘higher for longer’ to gradual cuts, while the labor market has also softened.”

Steven Glick, director of mortgage sales for HomeAbroad: “There’s been enough recent rate relief to pull some buyers and refinance candidates back into the market, but not enough to make affordability feel easy. How we got here is pretty straightforward: inflation cooled, the Fed made its first rate cut, and long-term bond yields eased. Simply put, we’re in a better place than last year, but not out of the woods. Rates are still high enough to squeeze monthly payments, yet we’re finally seeing buyers re-engage and refinances pick up versus last year as rates drift lower. If inflation keeps easing and the Fed cuts a bit more, without spooking bond markets, I’d expect mortgage rates to grind lower in small steps, not fall in a straight line.”

Rick Sharga, president/CEO of CJ Patrick Company: “Mortgage rates are being held hostage by the $37 trillion national debt of the United States. That debt means the Treasury Department has to issue more bonds to cover debt payments. The more bonds that are issued, the higher the yields generally need to be to sell them. The higher the bond yields, particularly on 10-year U.S. Treasury bonds, the higher mortgage rates will be.”

Baruch Mann, CEO of The Smart Investor: “Mortgage rates continue to press down on affordability across the country, making monthly payments feel steep – especially for first-time buyers already squeezed by modest inflation and job market anxiety. This is a direct legacy of the Federal Reserve’s battle against inflation in prior years: Their rate hikes cooled prices but locked millions of homeowners into their current low-rate loans and left new buyers clutching higher bills. Pressure is mounting rapidly for the Fed to cut rates, particularly as signs of rising unemployment have begun to appear on the economic radar.”

Albert Lord III, founder/CEO, Lexerd Capital Management LLC: “Rates remain elevated compared to pre-pandemic levels but well below 2023’s 8% peak. The key factors that will determine mortgage rates in 2026 will be inflation rates, the state of the labor market, the unemployment rate, bond market yields, and government deficits.”

Mortgage rate predictions for 2026: Will rates go down?

That gets us up to speed. But what do the experts prognosticate for mortgage rate averages in 2026? Our panel offered their forecasts.

Zev Freidus, president of ZFC Real Estate: “I expect 30-year mortgage rates to average around 6.1% in 2026, as inflation keeps cooling and the Fed slowly shifts its policy. Most major forecasts also see rates ending the year in the high-5% to low-6% range. I expect 15-year mortgage rates to average about 5.45% in 2026, as they usually sit about half to three-quarters of a point lower than 30-year loans. This outlook assumes inflation keeps cooling and the economy avoids any big shocks.”

Martin Orefice, founder, Rent To Own Labs: “I anticipate a downward trend to dominate throughout 2026. If we don’t have a major shock, I could see rates getting down to 5.2% next year. If we do have a major shock, they could go as low as 3%. The high cost of living makes these mortgages hard for people to afford every month, so lenders will need to offer more incentives.”

Ralph DiBugnara, president of Home Qualified: “With the Federal Reserve’s decision to start to ease interest rates and make cuts over the next few meetings, we will see average interest rates in 2026 hover around 6% for 30-year fixed-rate loans versus 5.625% for 15-year fixed-rate loans.”

Glick: “My base case is a 6% full-year average for the 30-year fixed in 2026 and 5.30% for the 15-year fixed rate. Why those numbers? Inflation is easing but not done. The core PCE price index was around 2.9% year-over-year in August. If it drifts toward 2.3% to 2.5% over 2026, mortgage rates can edge lower. If inflation re-accelerates or long-term deficits push the term premium up again, the average could land closer to 6.4%. If the job market softens faster and inflation breaks lower, we could see rates around 5.8%.”

Lord: “For 30-year and 15-year fixed mortgages, I expect an average of 6.1% and 5.3%, respectively, next year. The easing of Fed rates given inflation expectations, and the potential softness in the labor markets due to a variety of reasons, will require businesses to expand only when rates decline. Both 30- and 15-year rates are expected to trend downward through 2026, with the first quarter remaining elevated, quarter number two showing moderate relief, and quarters three and four reaching the lowest levels. The most favorable conditions are projected for the second half of the year 2026.”

Sharga: “Rates on the 30-year mortgage will enter 2026 somewhere between 6.25% and 6.50%, and there’s a chance that if the Federal Reserve continues to cut the Fed Funds rate during the year and the economy slows down as expected, rates could end the year right around or just below 6%.If that scenario is correct, we can expect rates on 15-year mortgages to begin the year between 5.50% and 5.75%, and possibly end the year between 5.0 and 5.25%.”

Mann: “I foresee the 30-year fixed mortgage rate averaging 5.5% to 6% next year. While rates have peaked in recent years, inflation remains sticky enough that the Fed is unlikely to slash aggressively. If unemployment rises sharply, limited easing is possible, but long-term borrowing will still carry significant costs. A mid-5% level represents a compromise between inflation pressures and recession risks. Inflation is not falling quickly enough to justify bigger cuts, so expect relatively stable borrowing costs.”

Evangelou: “The 30-year fixed mortgage rate will average around 6% in 2026. That reflects a gradual decline in both policy rates and term premia alongside softening job creation. And I expect the 15-year fixed home loan to average about 5.2% next year, maintaining its typical spread below the 30-year mortgage.”

How the government could impact rates next year

What will the Fed do in 2026? What measures can the Trump Administration enact that may affect mortgage rates? Here’s how our insiders expect things to shake out.

Lord: “I anticipate the Federal Reserve to cut rates gradually, by 100 to 150 basis points, contingent on inflation easing. This would lower borrowing costs and stabilize the bond market. Deregulation in the housing market could help housing supply in the longer term, but with limited near-term rate impact.”

Mann: “The Trump Administration will likely pressure the Federal Reserve for faster rate cuts, especially if unemployment rises or recession fears intensify. However, the Fed remains focused on inflation control, so any clash will depend on how inflation trends evolve. If inflation spikes again, the Fed may resist, leading to policy friction. If unemployment worsens, limited cuts may happen, but not drastic ones. Like we already see in 2025, political pressure could amplify market volatility.”

Glick: “If inflation keeps trending down, the Fed will execute a few moderate rate cuts in 2026, while maintaining cautious messaging and managing expectations on balance sheet policy. Their moves will strongly influence long yields and mortgage spreads. From the Administration side, actions that shift inflation, deficits, or confidence – such as tariffs, fiscal stimulus, and housing supply policies – can indirectly push mortgage rates. For example, unexpected fiscal largesse or higher deficits might raise yields and mortgage rates. Conversely, structural housing reforms or stimulus targeted at supply could help temper rate increases.”

Freidus: “Government housing plans could have some effect, but the Fed is what really drives mortgage rates. If inflation keeps easing and the economy slows a bit, I expect the Fed to hold steady or make small cuts, which should keep rates slowly trending down.”

Advice for homebuyers and homeowners in 2026

Our panel also offered recommendations on how home shoppers and refinance-minded homeowners should proceed heading into next year:

Chen: “There are many positive indicators for potential buyers in late 2025 and into 2026. Improving affordability, the potential of future rate cuts, and favorable home price trends are all reasons to consider a home purchase sooner rather than later. The challenge of saving for a down payment and current mortgage payments being more than 30% of median income certainly drives the need for careful thought and planning for potential home buyers, but it is nice to see recent improvement for access to homeownership.”

Orefice: “Home prices and interest rates are both trending down, so if you’re in a good financial situation, 2026 will be a favorable time to buy. I suspect the average buyer will be facing financial stressors from inflation and low economic growth, though. Refinancing could be a much better option than buying a new home, especially if rates go down. Many people have been stuck with expensive mortgages since 2022, and will take advantage of lower rates. The one potential issue here is that falling home prices could cut into people’s equity.”

Freidus: “For those considering a refinance, do the math on how long it takes to break even and how long you’ll stay in the home. If refinancing cuts your rate by around three-quarters of a point and the costs are fair, it’s worth a look. Just don’t restart the loan term unless the savings truly make it worthwhile. For those considering a purchase, buy when the home fits your life and the payment fits your budget. Get fully underwritten pre-approval, compare total costs across multiple lenders on the same day, and consider a no-cost refinance option if rates fall further in 2027.”

Glick: “If you need to buy in 2026, don’t try to time the last quarter-point: Buy when the math works, not when your instinct says, ‘lowest possible rate.’ Lock in when your payment is within budget, with an error margin of plus or minus 0.5%. Also, track local indicators, such as months of supply, price cuts, and days on market, to sense when leverage is shifting in your favor. Wait for 2027 only if you’re very sensitive to payment and can delay a home purchase without cost. For refinancers, aim for at least 50 to 75 basis points of rate savings with a breakeven period of 24 to 30 months or less. But if you plan to move soon or your breakeven is farther out than your time in the home, skip it.”

Mann: “Refinancing in 2026 should be considered only if absolutely necessary, as rates will likely stay elevated around 5.5% to 6% next year. If you are refinancing to remove a co-borrower, consolidate debt, or secure a fixed term, it can make sense, but weigh the costs carefully. Patience may be the buyer’s strongest tool. Rates are expected to stay high, and prices are not projected to drop dramatically, but the risk of softer prices in 2027 makes waiting a smart choice. Do not commit to a long-term financial burden at the top of the market if you can avoid it. If you must buy, focus on affordability, negotiate aggressively, and explore incentives or seller concessions. Always run numbers under stress-test scenarios, imagining unemployment or higher living costs, to ensure your purchase is truly sustainable.”

Evangelou: “Remember to shop the payment, not just the rate. Buyers should focus on the monthly cost that they can comfortably afford and compare lenders to make sure they get the best payment. Don’t wait to purchase until 2027. You can always refinance later when rates go lower. In the meantime, buying sooner allows you to start building equity and long-term wealth.”

Sharga: “If rates fall below 6% for a 30-year loan and get close to 5% for a 15-year loan, many borrowers would benefit from refinancing, and should at least consider taking advantage of the opportunity to do so. But only 20% of borrowers currently have an interest rate above 6%, so a huge increase in refinance loans doesn’t seem likely unless rates fall further.” Lord: “Don’t wait for slightly lower mortgage rates in 2027. Modest price appreciation will likely offset any savings. Buyers should focus on affordability and stress-test payments, use seller/builder concessions – especially buydowns – get pre-approved, and research local markets. Treat current rates as temporary, with an eye on refinancing opportunities likely in late 2026 or 2027. Remember that the purchase of the house provides other tangible advantages, such as the tax deductibility of mortgage interest and the ability to use the future house appreciation as collateral for other purchases or expanding personal credit.”