Whether you want to buy your first home, refinance your mortgage, or invest in real estate, you’re likely anxiously wondering when mortgage rates will go down.
Mortgage rate predictions are never set in stone. If any of the factors that impact rates — inflation, jobs, the 10-year Treasury yield — change unexpectedly, then organizations need to update their projections.
A few organizations stand out for their mortgage rate forecasts. One of my go-to sources is Fannie Mae, a government-sponsored enterprise (GSE).
The organization published the October 2026 Fannie Mae Housing Forecast, and the projections probably aren’t what you want to hear. Fannie Mae expects the average 30-year fixed mortgage rate to stay in the mid-7.5% range throughout 2027.
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Fannie Mae mortgage rate predictions have spiked since September
In its October Housing Forecast, Fannie Mae predicted the national average 30-year fixed mortgage rate would be 7.4% in Q4 2026 and 7.5% throughout all of 2027.
These differ significantly from the GSE’s September predictions.
In the September 2026 Fannie Mae Housing Forecast, the organization projected the 30-year mortgage rate at 6.8% in Q4 2026, then inching down to 6.7% for all of 2027.
So, what changed?
Fannie Mae’s monthly mortgage rate predictions are based on Freddie Mac mortgage rate data. More specifically, Fannie Mae focuses on Freddie Mac rates on the last day of the previous month.
For its September forecast, Fannie Mae used the Freddie Mac average 30-year rate from Aug. 31, which was 6.66%.
For its October forecast, the GSE used Freddie Mac data from Sept. 30, which was 7.03%.
Although Fannie Mae’s forecast relies on data from the previous month, the subsequent increase in mortgage rates appears consistent with its higher projection. Freddie Mac’s average 30-year rate reached 7.4% on Oct. 8.
The October 2026 Fannie Mae Housing Forecast puts the 30-year mortgage rate at 7.4% in Q4 2026, then 7.5% throughout 2027.
Fannie Mae vs. MBA: Comparing mortgage rate predictions
The Mortgage Bankers Association (MBA) is a trade association representing the mortgage industry. Along with Fannie Mae, I consider it to be one of the most reliable sources for rate predictions.
So, Fannie Mae predicts the average 30-year mortgage rate will end 2026 at 7.4% and hold at 7.5% through 2027. How do these numbers compare to the MBA’s predictions?
The MBA foresees slightly lower rates. The October MBA Mortgage Financial Forecast put the 30-year fixed rate at 7.3% for the end of 2026. Then, the MBA expects the rate to drop to 7.2% for the first three quarters of 2027 and 7.1% in Q4 2027.
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Although Fannie Mae and the MBA both use Freddie Mac mortgage rate data as a reference, their forecasts differ partly because they have different outlooks for the 10-year Treasury yield, a key influence on mortgage rates.
In the October 2026 Fannie Mae Economic Forecast, the GSE predicts the 10-year Treasury yield will hold steady at 5.3% throughout 2026 and 2027.
However, the MBA projects a 5.1% yield through the end of 2026, a 5% yield for most of 2027, and a 4.9% yield in Q4 2027. So, it makes sense that its mortgage rate predictions are lower than Fannie Mae’s.
Each organization uses its own assumptions and formulas to predict 10-year Treasury yields and mortgage rates. Their forecasts may differ, but the overall message is the same: Both expect 30-year mortgage rates to stay above 7% throughout 2027.
When can Americans expect mortgage rates to decrease?
Mortgage rates typically decrease when inflation cools and increase when inflation growth is aggressive.
The Bureau of Labor Statistics published the September Consumer Price Index (CPI) on Wednesday, Oct. 14. The CPI is a key measure of inflation. The hotter-than-expected inflation reading could put upward pressure on mortgage rates, although the impact will also depend on Treasury yields and how markets interpret the data.
The September inflation rate was 3.7%. This exceeded economists’ predictions of 3.6%.
“Core” inflation, which removes the volatile categories of food and energy, was also more aggressive than projected. It rose by 2.6%, while economists had expected 2.5%.
The 10-year Treasury yield spiked immediately after the CPI release but calmed down throughout the day. Time will tell how inflation numbers affect the yield in the coming days and weeks.
A sustained decline in inflation could help ease pressure on mortgage rates, particularly if the 10-year Treasury yield also falls. Until those conditions improve, mortgage rates could remain above 7%, as both Fannie Mae and the MBA currently project.
