The mortgage rates forecast 2026 just got a meaningful upgrade. Fannie Mae now projects the 30-year fixed mortgage rate will decline through each remaining quarter of 2026, reaching 5.7% by the fourth quarter. If realized, it would be the first time rates drop below 6% since late 2022, potentially unlocking a wave of pent-up buyer and refinancing demand that has been frozen by nearly four years of elevated borrowing costs.
The forecast arrives at a critical moment for the housing market. Current rates hover near 6.4% according to Freddie Mac's weekly survey, and the 10-year Treasury yield — the benchmark that most directly influences mortgage pricing — sits at 4.59%. Millions of would-be buyers and existing homeowners locked into sub-4% pandemic-era mortgages are watching rate movements closely, waiting for a trigger to act.
What happened
Fannie Mae's updated Economic and Housing Outlook, released in its March forecast and reiterated through April, projects a steady decline in the 30-year fixed mortgage rate across 2026. The agency expects rates to average 6.0% in Q1, drop to 5.9% in Q2, reach 5.8% in Q3, and fall to 5.7% by Q4. This represents a downward revision from earlier projections, which had rates staying at 6.1% through the first half of the year.
The revision reflects Fannie Mae's expectation of slower GDP growth and a corresponding easing in Treasury yields. When economic growth decelerates, bond yields typically fall as investors seek safety, pulling mortgage rates lower. The agency also factors in expectations that the Federal Reserve will cut its benchmark rate at least once more in 2026, though the timing remains uncertain given persistent inflation pressures.
However, Fannie Mae stands alone among major forecasters in predicting sub-6% rates this year. The Mortgage Bankers Association (MBA) maintains a more conservative outlook, projecting rates will stay above 6% through 2026 and into 2027. The divergence reflects genuine uncertainty about the inflation trajectory, Federal Reserve policy, and geopolitical risks that could keep Treasury yields elevated. The spread between the 10-year Treasury and 30-year mortgage rate currently sits at 1.77%, gradually compressing toward the historical average of 1.5%, which provides a modest tailwind for mortgage rate declines even without further Treasury yield drops.