Will Mortgage Rates Go Down in 2027? What Forecasters Now Say
Fannie Mae and the MBA both see rates above 7% through 2027. Here's why forecasts jumped, and how to plan if rates stay high.
- Fannie Mae (Oct 14): 30-year rate averaging 7.4% in late 2026 and 7.5% through 2027.
- MBA (Oct 11): About 7.3% in late 2026, staying above 7% through 2027.
- The optimists: TD Cowen expected about 6.6% in 2027, but that call came before September’s hot inflation report.
- Right now: Freddie Mac’s weekly average was 7.24% for the week of October 29, 2026.
If you’ve been waiting for mortgage rates to “go back to normal,” the big forecasters have some unwelcome news: their best guess for 2027 looks a lot like today.
Here’s what the major outlooks say, why they changed so sharply this fall, and how to plan when the forecast is “higher for longer.”
What the forecasters expect
| Forecaster | Late 2026 | 2027 | Published |
|---|---|---|---|
| Fannie Mae | 7.4% | 7.5% average | October 14, 2026 |
| Mortgage Bankers Association | About 7.3% | Above 7% | October 11, 2026 |
| TD Cowen | About 6.8% | About 6.6% | Early October 2026 |
These are averages for the 30-year fixed rate, the most common U.S. mortgage. Your own rate will depend on your credit, down payment, loan type and points.
Why forecasts jumped this fall
A few months ago, most forecasters expected rates in the 6s. Fannie Mae’s previous outlook had about 6.8% for late 2026 and 6.7% for 2027. Then three things happened:
- Inflation sped up. Consumer prices rose 3.7% over the year to September, up from 3.4% in August.
- The Fed raised rates. It hiked a quarter point in September and held on October 28, with two officials voting for another hike.
- Bond yields climbed. The 10-year Treasury yield, which mortgage rates track closely, climbed above 5% in early October before easing to just under 5% by month-end.
The MBA’s forecast also assumes the Fed raises rates twice more, in December 2026 and early 2027. That’s a big part of why it doesn’t see relief soon.
What 7.5% vs. 6.6% means in dollars
On a $300,000 30-year loan, principal and interest only:
- At 7.50% (Fannie Mae’s 2027 view): about $2,098/month
- At 7.24% (today): about $2,044/month
- At 6.60% (TD Cowen’s 2027 view): about $1,916/month
The gap between the most and least optimistic forecasts is about $182 a month, or roughly $2,180 a year.
Plug in your own loan size with the mortgage calculator.
How to plan when rates may stay high
If you’re buying
- Budget at today’s rate, not a hoped-for one. If refinancing later happens, great. Don’t buy a house that only works if rates drop.
- Look at the full menu. A 15-year loan has a lower rate but a higher payment. An adjustable-rate mortgage may start lower but carries reset risk. Government-backed options like FHA and USDA loans can help with the down payment.
- Use negotiating power. With contract signings at record lows, sellers and builders are more open to credits or rate buydowns.
If you already own
- Don’t count on a quick refi. Fannie Mae cut its 2027 refinance volume forecast by almost half. If you have a rate below 7%, you’re likely sitting on a good deal.
- Prepaying can beat waiting. Extra principal payments save interest at any rate. Try the extra payment calculator.
- Refi only when the math works. Our when to refinance guide explains the break-even test.
What could change the forecast
- Inflation cooling faster than expected. That would be the clearest path to lower rates.
- A weaker job market. Slower growth usually pulls bond yields down.
- Global shocks. Energy prices and geopolitics have pushed yields around all year, in both directions.
Watch Freddie Mac’s Thursday survey and the December 9 Fed decision for the next clues. We break down each move in plain English, starting with our take on today’s 7%+ rates.
FAQ
Will mortgage rates go down in 2027?
The main forecasts don’t expect much relief. Fannie Mae projects a 7.5% average in 2027, and the MBA expects rates above 7%. A few banks expect mid-6% rates, but those calls came before September’s inflation data.
What is the mortgage rate forecast for the end of 2026?
Fannie Mae expects about 7.4% in the fourth quarter of 2026, and the MBA about 7.3%. Freddie Mac’s weekly average was 7.24% for the week of October 29.
Should I wait for rates to drop before buying?
Waiting can make sense if your finances aren’t ready, but forecasts suggest rates may not fall soon. If the payment fits your budget today, waiting for a drop is a gamble, not a plan.
Why do mortgage rates follow the 10-year Treasury?
Most mortgages are paid off or refinanced within about a decade, so investors price them against similar-length government bonds. When the 10-year yield rises, mortgage rates usually rise too.
Sources: Fannie Mae Economic and Strategic Research Group October 2026 Housing Forecast; Mortgage Bankers Association October 2026 forecast; Freddie Mac Primary Mortgage Market Survey; Federal Reserve FOMC statement (October 28, 2026); U.S. Bureau of Labor Statistics CPI. This article is general education, not financial advice. Keys & Coffee is not a lender.
Keys & Coffee is an independent education site. We are not a lender or mortgage broker, we do not take loan applications or payments, and nothing here is financial advice. This site is not affiliated with Axia Home Loans, Axia Financial, LLC, or Planet Home Lending. Rates and rules change often — always confirm details with a licensed loan officer and check any lender on the NMLS Consumer Access site.
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