Mortgage rates continued to decline heading into December, reaching their lowest levels of 2025. The past year has been encouraging for home loan borrowing costs, with 30-year mortgage rates starting in January at nearly 7% before gradually pulling back to the low-6% range as we look forward to 2026.
But what’s good news for mortgage rates isn’t always good news for consumers at large. In general, interest rates on mortgages tend to be lower when the U.S. economy is showing signs of weakness and higher during times of economic strength. The past year has also marked a significant slowdown in the American labor market, marked by tumbling job growth and rising unemployment.
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Although the Federal Reserve doesn’t directly control mortgage rates, it’s notable that rates are declining ahead of the central bank’s meeting on Dec. 9 and 10. Mortgage lenders often “price in” rate cuts ahead of the announcements, and it seems increasingly likely that policymakers will vote to reduce the federal funds rate this week.
Falling rates are a welcome development for those waiting to buy a home or refinance their mortgages — but opinions vary on whether rates will fall any further in 2026 and beyond.
Economists Release 2026 Housing Forecasts
Mortgage rate trends are incredibly difficult to predict, even in the most stable times. In today’s uncertain economic environment, it’s even more challenging to accurately forecast future mortgage rates — but that hasn’t stopped some of the nation’s largest real estate groups and trade associations from trying.
Realtor.com released its 2026 housing forecast last week, predicting that 30-year mortgage rates would average 6.3% next year. The real estate listings website’s economics group believes home prices will rise a modest 2.2%, which could help ease affordability pressures.
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Meanwhile, the real estate marketplace Zillow forecasts that mortgage rates will hold above 6% and that home values will rise 1.2% in 2026, with rents remaining essentially flat.
“The housing market is finally settling into a healthier state, with buyers and sellers starting to return,” Mischa Fisher, chief economist at Zillow, says in the report. “Buyers are benefiting from more inventory and improved affordability, while sellers are seeing price stability and more consistent demand. Each group should have a bit more breathing room in 2026.”
However, opinions on next year’s housing market vary depending on whom you ask. Economists at Fannie Mae believe that mortgage rates will dip under 6% late next year. The Mortgage Bankers Association, an industry trade group, forecasts that rates will hold steady at 6.4% throughout 2026. And finally, the economic group at Wells Fargo Bank expects rates to bottom out at 6.15% in the first two quarters of the year, then rise slightly through 2027.
You can find details on all the latest predictions at the 2026 U.S. News mortgage rate forecast roundup.
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Mortgage Rates Drop Ahead of Fed Meeting originally appeared on usnews.com
