Mortgage Rate Forecast 2026–2028: Experts See Rates Stuck Near 7%

Mortgage rates near 7%, and forecasters now expect them to stay there

Until recently, the mortgage outlook for the next two years assumed rates would slowly come down. That assumption no longer holds. Over a few weeks in October, the main housing forecasters raised their projections sharply. For homebuyers, the takeaway is to stop budgeting for a return to 6% and plan around rates close to 7% through 2027, and probably into 2028.

The current numbers are high. Freddie Mac reported that the average 30-year fixed rate was 7.32% for the week of Oct. 22, down from 7.40% the week before. It was the first weekly decline since late August.38 The 15-year fixed average slipped to 6.68% from 6.71%. A year ago, the two averages were 6.19% and 5.44%.4 The 30-year rate is up 1.13 percentage points from a year earlier. One estimate puts the payment savings from last week's dip at only about $22 a month on a $400,000 loan.4 The climb started in late February, when the 30-year average briefly fell to 5.98%, its lowest level since late 2022.1

Forecasters raised their outlooks in October

The biggest change came from Fannie Mae. Its October Housing Forecast puts the 30-year rate at 7.4% in the fourth quarter of 2026 and 7.5% for every quarter of 2027.16 In September, Fannie Mae expected 6.8% for the current quarter and 6.7% for 2027. In one month, its 2027 forecast rose by roughly eight-tenths of a point.1619 It also raised its projection for the 10-year Treasury yield, the benchmark mortgage rates follow most closely. Fannie Mae now expects the yield to end 2026 near 5.3% and stay there through 2027, up from 4.8% in its September forecast.19

The Mortgage Bankers Association (MBA) forecast is a bit lower but tells the same story. MBA expects the 30-year rate at 7.3% at the end of 2026. It then sees 7.2% for the first three quarters of 2027 and 7.1% in the final quarter.16 MBA's Oct. 11 forecast is the only major one that extends into 2028. It shows the rate starting 2028 at 7.1% and falling only to 7.0% by year-end, with 6.9% at the end of 2029.15 The reason it barely moves is MBA's Treasury forecast, which keeps the 10-year yield around 5.0% for most of 2027 and 4.9% in 2028.15 Wells Fargo is the most optimistic of the three. It projects the conventional rate falling a nickel per quarter, from 7.10% at the end of 2026 to 6.90% by the end of 2027. That averages about 6.98% for next year.15

Taken together, the three main forecasts put 2027 rates between about 6.9% and 7.5%. None of their published numbers shows a return to 6% by 2028.15 Trading Economics' econometric model points the same way, with the MBA 30-year rate around 7.05% in 2027 and 7.19% in 2028.20

Where the forecasts disagree

The gap between forecasts depends mostly on when they were made. A U.S. News roundup updated in July described rates staying in the mid-6% range. At that time, the National Association of Home Builders (NAHB) expected averages of 5.96% in 2027 and 5.89% in 2028, and MBA expected 6.5% across all three years.13 Even then, MBA economists warned that the war in the Middle East was pushing oil prices and inflation higher, and that rates would stay higher for longer.13 Most of those mid-year numbers have since been dropped.

The pattern repeats elsewhere. A five-year scenario analysis in September put 2027 at about 6.20%. A revised version in mid-October raised its base case to 6.95% for 2027 and 6.60% for 2028. The revision cited a September Fed rate hike and a wider gap between mortgage rates and Treasury yields.1112 That revised analysis also laid out a bad scenario in which rates reach 8.05% in 2028, and a good scenario that starts at 6.55% in 2027 if the Fed changes course early.12 An Oct. 12 three-year outlook still pointed to roughly 6.0% to 6.2% in 2028, while noting that sticky inflation could keep rates above 7.5%.17 A consolidated outlook updated Oct. 22 puts the 2027 average near 7.3% and 2028 near 6.8%, and expects rates below 5% no earlier than about 2031.14

The newest projections are the most credible, because they include the October rise in yields and the Fed's turn toward raising rates. The older, more optimistic numbers should be treated as out of date. Industry economists are now saying much the same. NAHB chief economist Robert Dietz called a roughly 7.5% range the "new normal" until geopolitical tensions ease. National Association of Realtors (NAR) chief economist Lawrence Yun has gone from expecting about 6.5% this year to only hoping rates near 6% show up in early 2027.15

Why borrowing costs keep rising

The main driver is the bond market, not mortgage lenders. The 10-year Treasury yield has been trading around 5.1%.2 Reporting describes 10-year and 30-year yields at their highest levels since 2002, pushed up by energy-driven inflation and expectations of more Fed tightening.20 Oil was above $100 a barrel in mid-October.2 Fannie Mae's forecast assumes two more quarter-point Fed hikes, with the effective fed funds rate reaching 4.4% through most of 2027.19 Wells Fargo expects one more hike in December and says the risks lean toward more increases, not fewer.15

The main path to lower rates runs through a weaker economy. NAHB's Dietz puts the chance of a broad slowdown next year at 35%, and slowdowns usually pull rates down.15 So the most realistic hope for cheaper mortgages depends on economic damage that buyers would also feel in other ways.

Home sales have fallen while prices keep rising

The September sales data shows how much higher rates are holding back demand. NAR reported that existing-home sales rose 1.5% from August to a seasonally adjusted annual pace of 3.99 million but were down 2.2% from a year earlier.21 The monthly gain was partly the result of a downward revision to August, which NAR now puts at 3.93 million. Yun said August and September were the two slowest months for sales this year.22 He described the market as "scraping to the bottom" of its range and argued that weak demand, not tight supply, is now the problem.22

Inventory backs that up. There were 1.60 million homes for sale, up 4.6% from a year earlier and the most since November 2019. That equals 4.8 months of supply, up from 4.5 months a year ago.2230 The median home spent 33 days on the market, up from 31 in August.25

Even so, prices are still rising. The median existing-home price was $417,500, up 1.3% from a year earlier. That was the 39th straight month of year-over-year gains and the highest September median on record.2122 The national figure hides big regional differences. The Northeast median rose 4.7% to $523,600, while the West's fell 0.3% to $613,600.21 The South gained only 0.2%.21 Sales fell from a year earlier in every price band except homes priced at $1 million or more, where sales rose 4%.22 That suggests wealthier buyers are much less affected by higher rates.

The effects show up across the mortgage business. NAR's affordability index fell to 105.4 from 106.7 a year earlier.22 Fannie Mae now expects single-family mortgage originations of $1.86 trillion in 2027, down from its earlier forecast of $2.28 trillion.19 Refinance demand in mid-October was down 59% from the same week a year earlier.7

What this means for buyers

For buyers, the main change is in how to plan. One projection estimates the monthly principal-and-interest payment on a typical loan at about $2,748 at today's 7.32% rate. It would be roughly $2,797 at Fannie Mae's 7.5% forecast and $2,634 at Wells Fargo's year-end 2027 estimate.15 Under these forecasts, waiting for lower rates saves little and could take a long time.

There is some good news. First-time buyers made up 31% of September sales.30 Yun said rising inventory and longer selling times give buyers more room to negotiate, and that sellers may need to offer price cuts or other incentives.28 With sales near their lows, inventory back to pre-pandemic levels and price growth slowing in the South and West, buyers who can afford rates around 7% are likely to have more bargaining power than at any point in years.

Forecasts can be wrong, and they have changed a lot in just a few months. Still, the October forecasts agree more closely than earlier ones did. The safest assumption for buyers is that rates stay near 7% through 2027 and possibly into 2028, and that any drop below that level should be counted as a bonus, not built into the plan.15