United States mortgage rates are set to fall below 6% by the end of 2026, Fannie Mae projected in its September Economic and Housing Outlook.
Fannie Mae expects mortgage rates at the end of 2025 will be 6.4%, dropping to 5.9% at the end of 2026. This is a downward revision from its August forecast of 6.5% in 2025 and 6.1% in 2026.
“We project single-family mortgage originations to rise to US$1.85 trillion and $2.32 trillion, respectively, for 2025 and 2026,” according to Fannie Mae. Its prior forecast was $1.85 trillion for 2025 and $2.26 trillion for 2026.
U.S. mortgage rates have been falling since mid-July, ahead of the Federal Reserve announcing it would cut interest rates by 0.25% last week.
The 30-year fixed mortgage rate average fell from 6.35% to 6.26% in the week to 18 September.
This is the lowest 30-year fixed mortgage rate since October. The share of mortgage applications that were refinances climbed to almost 60% last week, according to Freddie Mac, which is the highest percentage in more than three years.
The National Association of Realtors similarly predicted this month that mortgage rates will be in the mid-6% range in 2025, and potentially decline to 6% in 2026.
Total U.S. home sales in 2025 will also reach 4.72 million, Fannie Mae expects, in a downward revision from its previous forecast of 4.74 million.
Fannie Mae’s U.S. GDP outlook includes growth of 1.5% in 2025 and 2.1% in 2026. It anticipates the Consumer Price Index will rise by 3.1% across 2025, with core inflation up 3.2%.
