Two teams of expert economists published their May mortgage finance forecasts this week. And both expect mortgage rates to fall slowly but consistently after this quarter, with the trend lasting through the rest of this year and throughout 2026.
Those wishing to buy and sell homes will likely welcome the news, which provides a glimmer of light after a dark period for mortgages and the housing market.
One forecast came from Fannie Mae and the other from the Mortgage Bankers Association (MBA). Each organization maintains a team of specialist economists who focus on the housing market and mortgage rates. So, their forecasts are respected in the industry.
What the Forecasts Say
Neither Fannie nor the MBA expects sharp rate declines. Instead, they predict gentle falls in almost every quarter after this one, and no increases. Fannie's forecast is the more optimistic one, believing the average rate for a 30-year, fixed-rate mortgage (FRM) could dip to 5.8% by the last quarter of next year. For comparison, that rate stood at 7.0% on Thursday evening (May 22, 2025), according to the Mortgage Research Network's figures.
The MBA reckons that same rate could be 6.3% by the last quarter of next year. And it expects it to remain at that level through 2027. (Fannie doesn't forecast that far ahead.)
Timetables for falling mortgage rates
The forecasts show the expected rate for a 30-year FRM starting in the July-September quarter of this year (Q3/25) and going through to the last quarter of 2026 (Q4/26).
Here are the details of the two forecasts:
Fannie and the MBA's quarterly mortgage rate forecasts
| Quarter | Q3/25 | Q4/25 | Q1/26 | Q2/26 | Q3/26 | Q4/26 |
|---|---|---|---|---|---|---|
| Fannie Mae | 6.3% | 6.1% | 6.0% | 5.9% | 5.9% | 5.8% |
| MBA | 6.7% | 6.6% | 6.5% | 6.5% | 6.4% | 6.3% |
How Accurate Are the Forecasts Likely To Be?
If there's a single word that sums up markets and mortgage rates over the last few months, it's uncertainty. And that makes these forecasts necessarily challenging.
No matter how clever the economists or how sophisticated their computer modeling, these teams are having to work with a lot of unknowables. Whether they turn out to be right will depend on whether the assumptions they made in their models actually occur in the real world.
What the Forecasts Might Mean for Home Buyers and Sellers
Many first-time homebuyers have been waiting for lower mortgage rates before dipping their toes in the housing market. And many homeowners who would like to trade up, downsize or just relocate have been delaying making their move.
It's especially hard for them because taking on a 30-year FRM at between 6% and 7% is scary when one's currently paying a mortgage rate between 3% and 5%, as many are.
One thing that the forecasts tell us (and have been doing so consistently for a very long time) is that a miraculous slide in rates down to the sorts of levels seen in 2019 through '21 is highly unlikely anytime soon.
Some will dig their heels in and stay put for what might be many years. Others might rather grit their teeth and take on a higher mortgage rate than they'd like, knowing they could refinance if that miracle happens. It's a choice few envy.
