Mortgage Rates Likely to Hold Steady at 6.5% or Higher Over the Next Two Years
- Neil Caron
- Mar 17
- 2 min read
Fannie Mae Expects Home Sales to Improve in 2025, But Still Lag Behind 2019 Levels
🏡 Mortgage rates are pacing steadily toward the finish line—but don’t expect a sprint to lower rates anytime soon. According to Fannie Mae, mortgage rates will likely hover around 6.5% to 6.6% through 2026, with some potential market volatility along the way.
🔎 What Does This Mean for Homebuyers?
Despite hopes for lower rates, Fannie Mae’s Economic and Strategic Research (ESR) Group revised its forecast slightly upward, now expecting rates to settle at 6.6% by the end of 2025 and 6.5% in 2026. The group also noted that trade policies could introduce unexpected shifts in rates.
🏠 Home Sales Outlook: Small Gains, Big Perspective
On the bright side, Fannie Mae expects more home sales this year than previously forecast, thanks to a stronger-than-expected December and “resilient purchase applications.” However, home sales are still projected to finish the year 22% below 2019 levels.
Higher mortgage rates continue to fuel the “lock-in effect,” making it harder for homeowners with ultra-low interest rates to justify selling. This, in turn, is limiting housing inventory and making affordability a challenge.
💡 What Happens If Mortgage Rates Drop?
According to Kim Betancourt, Fannie Mae’s VP of Multifamily Economics and Strategic Research, if rates dip, affordability will improve, sparking an increase in home sales and mortgage applications. But until then, buyers need to strategize.
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