Economists at Fannie Mae are now forecasting much higher mortgage rates through the end of 2026 and into 2027. They now peg the 30-year average rate pegged at 7.4% for the fourth quarter of this year and 7.5% for all of next year. It previously forecast growth of 6.8% for the fourth quarter and 6.7% for all of next year.
The average 30-year fixed rate stood at 7.46% Tuesday, according to Mortgage News Daily, but it will likely rise today. Bond yields rise after higher-than-expected inflation report.
Aerial view of single-family homes lining the streets on April 2, 2026 in Thousand Oaks, California.
Kevin Carter | Getty Images
Mortgage rates have risen sharply since early September as inflation remains stubbornly high and bond markets sell off due to several factors. The Federal Reserve also raised its key interest rate for the first time in more than three years. Mortgage rates don’t exactly follow the Fed rate, but they do respond to how the central bank views inflation.
Mortgage rates loosely track the yield on 10-year Treasury notes, which have risen sharply due to rising oil prices and growing concerns about the global economy.
Rising interest rates have already frozen the real estate market this fall. Pending sales, counted by signed contracts on existing homes, fell 8.5% in September year-over-year, according to Zillow. Demand for mortgages continues to fall sharply as buyers face higher prices and lower affordability. Not only are fewer buyers now able to afford a home, but fewer are also eligible for a mortgage.
Fannie Mae did not respond to requests for comment on its latest forecast.
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