Mortgage Rates Are Nearly 7%. Here's What Forecasters Expect for the Rest of 2026

• 12:57 PM EDT

by UrbanTurf Staff

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Homebuyers hoping for a break on mortgage rates before the year ends are getting mixed signals from forecasters. Most see rates easing a bit from here, but none expect a return to 6% this year.

The 30-year fixed rate averaged 6.95% this week, according to Freddie Mac, up from 6.76% a week earlier and the highest level since January 2025. That survey didn't fully capture the market's reaction to the Federal Reserve's decision last week, when the central bank raised its benchmark rate a quarter point, its first increase since 2023. Other trackers already have rates higher: Optimal Blue put the conforming 30-year at 7.047% as of Wednesday.

The big forecasters expect a modest retreat by December. Fannie Mae and the Mortgage Bankers Association both call for 6.8% by year-end, which is higher than before: Fannie Mae's June forecast had rates averaging 6.4% for the rest of 2026. Keefe, Bruyette & Woods is a bit more optimistic, expecting rates to stay close to 6.5%, based on a 10-year Treasury yield of 4.75% at year-end. That would still be well above the 5.98% low reached in late February.

The risks look tilted toward higher rates. Redfin's Chen Zhao noted that Fed officials appear to believe more tightening is needed, and that rates are unlikely to fall significantly until underlying drivers, from oil prices to AI, change. According to CNBC, officials are weighing higher fuel costs from the Iran war and the lingering effects of tariffs. Markets are pricing in more hikes. CME FedWatch shows the odds nearly evenly split on a hike at the October meeting. For December, only 13% expect no change, while more than a third see a half-point increase

There's a case for eventual relief, but it comes with conditions. First American's Sam Williamson said firmer Fed action could steady the bond market and open the door to lower rates, but only if investors grow more confident that inflation is coming under control. Meanwhile, BTIG analyst Douglas Harter noted that 30-year rates are pricing above 7%, higher than Fannie Mae assumed, and sees further downside risk to the housing forecasts next month.

The takeaway is a forecast range of roughly 6.5% to 6.8% by December. That is below where rates are today, but forecasters have spent much of the year revising their numbers upward.

This article originally published at https://dc.urbanturf.com/articles/blog/mortgage_rates_are_nearly_7_heres_what_forecasters_expect_for_the_rest_of_2/25015.