There’s more good news for mortgage rates if you believe Fannie Mae’s latest monthly forecast.
In the company’s September 2025 Economic and Housing Outlook, they adjusted their mortgage rate predictions lower.
So much so that they now expect the 30-year fixed to be below 6% in 2026, which could be a welcome development for prospective home buyers.
And for existing homeowners in need of some monthly payment relief via a rate and term refinance.
Just note that their forecasts do change from month to month based on underlying economic data.
Sub-6% Mortgage Rates to End 2026?
- Fannie Mae finally expects mortgage rates to dip below 6%
- But it’s going to take another 12 months or so for that to happen
- NEW forecast: 6.4% by end of 2025, 5.9% by end of 2026
- Old forecast: 6.5% by end of 2025, 6.1% by end of 2026
Fannie Mae now expects the popular 30-year fixed mortgage to dip below 6% to end 2026.
Specifically, they’re calling for a rate of 5.9% in the fourth quarter of next year, down from the current 6.6% penciled for the third quarter of 2025.
Note that this forecast was valued on September 11th, before the Fed got together and made its FOMC announcement.
But it was just released today, so it doesn’t factor in the recent uptick in rates after the Fed cut.
By the way, I explained why mortgage rates went up after the latest Fed rate cut and it’s not really about the Fed at all.
The long and the short of it is that mortgage rates had already fallen a ton leading up to the cut. So a little bounce was expected.
Now we need to wait for even more soft economic data, such as cooler inflation or weaker jobs numbers, for mortgage rates to move lower.
Regardless, Fannie expects the 30-year fixed to slowly drift to that target, with an expected rate of 6.4% in the fourth quarter of this year.
Then 6.2% to start off 2026, 6.1% in the second quarter, 6.0% in the third quarter, then finally 5.9% in Q4 of 2026.
Will It Be a Slow Slog to Even Lower Mortgage Rates?
While folks are excited about recent developments with regard to mortgage rates, it could be a bit of a slog getting significantly lower.
As Fannie has laid out, we might just sort of inch lower and lower between now and the end of 2026. So be patient.
Of course, their forecast is very unlikely to go according to plan. For one, it’s extremely difficult to forecast mortgage rates.
Remember, mortgage rates change daily, similar to stocks, so it’s not just a simple path in one direction.
In addition, they don’t move in a perfect straight line up or down. In fact, they tend to have good months and bad months throughout the year.
I wised up to this (finally), and began making more thoughtful mortgage rate predictions, with my 2025 numbers rising and falling depending on the quarter.
So far I’m actually doing pretty well, not to toot my own horn. But I predicted the 30-year fixed at 6.75% in Q2 and 6.25% in Q3.
Both targets were hit, though there’s been a lot of bouncing around within those quarters.
My fourth quarter target for the 30-year fixed this year is an ambitious 5.875%. Only if/when that happens will I give myself a pat on the back.
I’m basically a year ahead of Fannie’s prediction, so we’ll see who’s ultimately right soon.
However, I’ve noted in the past that mortgage rates tend to be lowest in winter months.
As for why, it could partially be explained by mortgage lenders passing on more savings to customers when business is traditionally the slowest.
Either way, I expect a relatively slow march lower for mortgage rates, though they’ve already made a fairly sizable move this year.
Remember, the 30-year fixed was 7.25% in January and nearly a full percentage lower at the moment. That’s pretty good progress.
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.
