Mortgage Rates Won’t Fall Below 6% Anytime Soon, Top Economist Says in Grim Forecast

Mortgage rates could remain stuck above 6% for the next several years, according to newly released projections from the economists at the Mortgage Bankers Association.

MBA Chief Economist Mike Fratantoni presented the forecast at the group's annual conference in Las Vegas on Sunday, projecting that 30-year fixed mortgage rates will remain roughly in the range of 6% to 6.5% through the end of 2028.

"As we move over the next couple of years, we think it's more likely that long [term] rates are going to go up rather than down, given the fiscal pressures on the economy," Fratantoni told the conference, referring to the impact of rising federal deficits on bond markets.

That's a grim forecast for prospective homebuyers, who have already suffered through three straight years of mortgage rates hovering above 6%, with rates averaging 6.27% as of last week, according to Freddie Mac.

It's also among the bleaker predictions issued by top economists in the housing industry, with Fannie Mae's forecast more optimistic that mortgage rates will dip below 6% in late 2026.

Frantantoni predicts that the Federal Reserve will cut its short-term policy rate twice more in 2025, but only once next year, as concerns about inflation force the central bank to halt its cuts.

The economist believes that growing government budget deficits and elevated inflation expectations will keep longer term rates from falling further, even as the Fed cuts short-term rates this year and next.

This will keep the key 10-year Treasury yield above 4% and mortgage rates between 6% and 6.5%, he predicts. However, he expects there will be periods where rates ease, which will provide spurts of refinance activity, similar to what has occurred several times in 2025.

Despite the bleak outlook on rates, Frantantoni expects that total home sales will increase next year to just above 5 million, up from the 4.8 million the MBA projects for 2025, including sales of both new and existing homes.

“While mortgage rates are not expected to decline further, housing supply has increased in recent months, which will ease home-price growth and provide more housing options for prospective buyers," he says. "The increase in inventories will put downward pressure on home prices across the country."

The MBA economists predict that home prices will decline nationally for several quarters over the next few years, before returning to modest annual growth in late 2027.

Kan emphasized that housing market developments are location specific, as growing housing inventory in markets such as Florida, Colorado, and Arizona have led to annual home-price declines, while tight inventory and challenges to homebuilding in the Northeastern and Midwestern states such as New York, Connecticut, Illinois, and New Jersey drive price appreciation well above the national average.

MBA Deputy Chief Economist Joel Kan also spoke at the conference, where he noted that housing market developments are increasingly market-specific, with home prices now falling in much of the Sun Belt but continuing to grow in Northeast and Midwestern markets.

Kan said that mortgage payment affordability had improved slightly, with the typical mortgage payment now at $2,067, down marginally from the peak

“While median principal and interest payments are gradually declining, they are significantly higher than they were five years ago, given cumulative home-price appreciation and the current level of mortgage rates," says Kan.

Kan says that borrowers have increasingly shifted to adjustable-rate mortgages (ARM) and FHA loans to manage these affordability challenges.

"Additionally, the cost burdens from increasing taxes and homeowners’ insurance continue to pose challenges to both prospective homebuyers and existing homeowners,” says Kan.