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By Giulia Carbonaro
Senior Reporter
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Analysts at Wells Fargo, the Federal National Mortgage Association (Fannie Mae) and the Mortgage Bankers Association (MBA) have revised their expectations for the direction mortgage rates will take in 2025 and 2026, predicting that the 30-year fixed mortgage rate will remain between 6.3 percent and 7 percent for the next two years.
Why It Matters
Going into 2025, a majority of experts said that mortgage rates were likely to drop into the mid-5 percent range. But after the Federal Reserve expressed some caution about implementing further cuts to interest rates, and with inflation still higher than the central bank would like it, mortgage rates inched up in January, reaching the highest level since May 2024, at 7.04 percent.
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While rates have dropped since then, they remain historically high. As of February 6, the 30-year fixed mortgage rate was 6.89 percent, according to Freddie Mac. High mortgage rates are keeping aspiring homebuyers on the sidelines of the housing market, even as inventory is slowly growing across the country, exacerbating the ongoing nationwide affordability crunch.
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What to Know
All three companies have revised their expectations for the next two years to include higher mortgage rates than previously foreseen.
Wells Fargo now expects the 30-year fixed mortgage rate to average 7.1 percent in the first quarter, while it will slide down to 6.9 percent between April and June. In the third and fourth quarters of the year, the company expects the rate to fall further, reaching 6.7 percent and 6.5 percent, respectively.
And that's about where Wells Fargo, at least at the moment, expects the 30-year fixed mortgage rate to stay for the following year. In all four quarters of 2026, the company expects the 30-year fixed mortgage rate to remain at 6.5 percent.
Overall, the company expects mortgage rates to be 38 basis points higher in 2025 and 16 basis points higher in 2026 than in its previous outlook.
The MBA expects the 30-year fixed mortgage rate to average 7 percent between January and March, before falling to 6.9 percent between April and June. In the third quarter, MBA says the rate will fall to 6.7 percent, while in the last quarter of the year it will average 6.5 percent. Throughout 2026, MBA expects the rate to stay at 6.4 percent.
Overall, the MBA now expects mortgage rates to be 30 basis points higher in 2025 and 20 basis points higher in 2026 than in its previous outlook.
Fannie Mae, on the other hand, has slightly more optimistic expectations. The government-sponsored company expects the 30-year fixed mortgage rate to reach an average of 6.7 percent in the first quarter, before going down to 6.6 percent in the second and 6.5 percent in the third and the last quarters of the year. In the first quarter of 2026, Fannie Mae expects Americans' most popular mortgage rate to reach 6.4 percent, where it will stay until the last quarter of the year, when it will dip to 6.3 percent.
Overall, Fannie Mae expects mortgage rates to be 20 basis points higher in 2025 and 30 basis points higher in 2026 than in its previous outlook.
What People Are Saying
Melissa Cohn, regional vice president at William Raveis Mortgage and a 40-year veteran of the mortgage industry, said in a statement shared with Newsweek: "Mortgage rates will move with inflation and employment data, as always, even with all the uncertainty behind President Trump's implementation of his new policies and the impact on inflation and the economy. There are a lot of unknowns at the moment."
Redfin economist Chen Zhao said last week: "With a still strong labor market, inflation just above target, and much White House policy uncertainty, the Fed is unlikely to signal further rate cuts before May or June. While mortgage rates have fallen slightly in recent weeks, they are likely to remain high and at risk of significant volatility."
Sam Williamson, a senior economist at First American, said in a statement shared with Mortgage Orb last week: "Borrowing costs, including mortgage rates, are likely to stay elevated for an extended period, reducing the potential for a strong housing market rebound in the spring. Overall, mortgage rates are expected to drift modestly lower to the mid-to-low 6 percent range by year-end, though unexpected labor market or economic downturns could cause rates to fall more quickly.""
What's Next
Experts agree that mortgage rates will come down throughout 2025 and 2026, but not by much. Homebuyers hoping for lower rates to offer some relief may have to wait a little longer.
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