Mortgage Rates Expected to Move Below 6 Percent by End of 2026
Fannie Mae’s Economic and Strategic Research (ESR) Group projects mortgage rates to gradually decline over the next two years, ending 2025 at 6.4% and 2026 at 5.9%. This easing is expected to support growth in home sales, with new and existing transactions forecast to reach 4.72 million in 2025 and 5.16 million in 2026. Single-family mortgage originations are also anticipated to increase, from $1.85 trillion in 2025 to $2.32 trillion in 2026, alongside a notable rise in refinancing activity as lower rates create new opportunities for homeowners.
The ESR Group emphasizes that these forecasts depend on many factors and could shift if underlying assumptions or market conditions change. Their analyses are intended to provide insight into economic and housing trends rather than predict Fannie Mae’s business performance. Led by Chief Economist Mark Palim, the ESR Group relies on a mix of data analysis, historical trends and consumer and lender surveys to guide its outlook on the economy, housing market and mortgage industry.
