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Will Mortgage Rates Go Down? 2025-2026 Forecast

By Wirly Editorial Team | Updated March 30, 2026 | AI-assisted, human-reviewed

Will Mortgage Rates Go Down? 2025-2026 Forecast

Will Mortgage Rates Go Down? What the Data Says for 2025 and 2026

If you are wondering whether mortgage rates will go down, the short answer is: most major forecasts project modest declines through 2025 and into 2026, but rates are unlikely to return to the historic lows seen in 2020 and 2021. According to Freddie Mac’s Primary Mortgage Survey, the average 30-year fixed mortgage rate hovered near 6.65% as of early 2025, down from its peak above 7.79% in October 2023 but still well above the sub-3% rates many homeowners locked in during the pandemic.

The trajectory of mortgage rates depends on several interconnected factors, including Federal Reserve policy, inflation data, and the yield on the 10-year Treasury. Understanding these forces can help you decide whether to refinance now or wait. Below, we break down the latest data, expert forecasts, and what it all means for your monthly payment.

Key Takeaways

  • The average 30-year fixed mortgage rate is significantly below its 2023 peak but remains elevated compared to 2020-2021 lows.
  • Most forecasts from Freddie Mac, the Mortgage Bankers Association, and Fannie Mae project the 30-year rate could settle between roughly 6.0% and 6.5% by late 2025.
  • Whether rates drop further in 2026 depends heavily on inflation trends and Federal Reserve rate cut decisions.
  • Even small rate movements can significantly impact your monthly payment and total borrowing costs.
  • Rates change daily, so any snapshot is a point-in-time estimate. Always check current refinance rates before making decisions.

What Is the Current Mortgage Rate Today?

According to Freddie Mac’s weekly Primary Mortgage Survey, the average 30-year fixed-rate mortgage has fluctuated between roughly 6.5% and 7.0% through early 2025. The 15-year fixed-rate mortgage has generally tracked about 0.5 to 0.7 percentage points lower, while adjustable-rate mortgages (ARMs) such as the 5/1 ARM have offered initial rates that are modestly below fixed-rate options.

It is important to note that these are national averages. Your actual interest rate will depend on personal factors. According to the Consumer Financial Protection Bureau (CFPB), seven key factors determine your mortgage rate, including your credit score, down payment size, loan type, loan term, home location, and the overall interest rate environment. Even saving a fraction of a percent on your rate can save thousands of dollars over the life of a home loan.

Because rates change daily – and sometimes multiple times per day – any figure you read is already historical. Use our refinance calculator to estimate savings based on rates you are actually quoted by a lender.

Understanding the 30-Year Fixed Mortgage Rate and Fixed Options

The 30-year fixed mortgage remains the most popular home loan product in the United States. According to HMDA 2023 data, the vast majority of refinance and purchase originations were for 30-year fixed-rate mortgage terms. Its appeal is simple: your interest rate and monthly payment stay the same for the entire life of the loan.

A 15-year fixed-rate mortgage charges a lower interest rate but comes with higher monthly payments because you are paying off the balance in half the time. For homeowners considering a refinance, the 15-year option can save significant money on total interest paid, but you need to ensure the higher payment fits your budget comfortably.

Adjustable-rate mortgages offer lower initial rates that reset after a fixed period (for example, five years on a 5/1 ARM). These can make sense if you plan to sell or refinance before the adjustment period begins, but they carry the risk that rates could rise substantially at reset. If you currently hold an ARM and are concerned about future rate adjustments, switching to a fixed-rate mortgage through refinancing is worth exploring.

Mortgage Rate Forecast: Factors Driving 2025 and 2026 Predictions

The Federal Reserve and Interest Rate Policy

The Federal Reserve does not directly set mortgage rates, but its actions heavily influence them. The Fed controls the federal funds rate, which is the short-term rate banks charge each other for overnight borrowing. When the Fed signals a rate cut – or a series of rate cuts – it generally puts downward pressure on longer-term rates, including mortgages.

After raising rates aggressively in 2022 and 2023 to combat inflation, the Fed began easing in late 2024. According to FRED data from the Federal Reserve Bank of St. Louis, the effective federal funds rate reached a target range of 5.25% to 5.50% before the Fed began its cutting cycle. Markets are watching closely for additional rate cut signals in 2025, though the pace depends entirely on incoming economic data.

Inflation Trends

Inflation is the single biggest factor the Federal Reserve watches when deciding rate policy. According to FRED data, the Consumer Price Index (CPI) peaked above 9% year-over-year in mid-2022 and has since fallen substantially. However, progress toward the Fed’s 2% target has been uneven, with shelter costs and services inflation proving persistent.

If inflation continues to cool, the Fed has more room to cut rates, which rates could push lower. If inflation re-accelerates, the Fed may pause or even reverse course, keeping mortgage rates elevated through 2025 and into 2026.

The 10-Year Treasury Connection

Mortgage rates track the yield on the 10-year Treasury note more closely than they track the federal funds rate. According to FRED data, the spread between the 30-year mortgage rate and the 10-year Treasury yield has been historically wide in recent years, averaging over 2.5 percentage points compared to a long-term average closer to 1.7 points.

If this spread narrows back toward historical norms – even without a significant drop in Treasury yields – mortgage rates could decline meaningfully. A normalization of this spread alone could shave roughly 0.5 to 0.8 percentage points off current mortgage rates.

Market Conditions and Economic Outlook

Broader market conditions also matter. A strong labor market tends to keep rates higher because the Fed feels less urgency to stimulate the economy. Conversely, signs of economic weakness – rising unemployment, slowing GDP growth – typically push rates lower as investors move money into the safety of bonds, driving yields down.

Will Mortgage Rates Drop This Year? And What About 2026?

Based on available forecasts from major housing finance organizations, the consensus points to a gradual decline rather than a dramatic drop. Freddie Mac, Fannie Mae, and the Mortgage Bankers Association have all projected the average 30-year rate finishing 2025 somewhere in the range of 6.0% to 6.5%, depending on how inflation and Fed policy unfold.

Looking further ahead, some forecasts suggest rates could dip into the upper 5% range by 2026 if inflation reaches the Fed’s 2% target and the economy avoids a significant disruption. However, these are projections, not guarantees. Unexpected events – geopolitical crises, trade policy shifts, financial market disruptions – can move rates in either direction quickly.

To directly address common questions:

  • Will mortgage rates go down tomorrow? Daily rate movements are unpredictable. They respond to bond market trading, economic data releases, and global events in real time.
  • What will mortgage rates go down to in 2025? Most forecasts suggest the average 30-year rate could reach roughly 6.0% to 6.3% by year-end 2025, but this depends on continued progress on inflation.
  • Will mortgage rates go down in 2026? If the Fed continues its rate cut cycle and inflation remains controlled, rates could settle in the high 5% range by 2026. This is not guaranteed.
  • How much will mortgage rates go down in the next year? Most forecasts imply a decline of roughly 0.25 to 0.75 percentage points from current levels over the next 12 months.

What This Means for You

If you are a homeowner with a current mortgage rate above 7%, even the modest declines projected for 2025 could create a worthwhile refinance opportunity. A drop from 7.0% to 6.25% on a $350,000 loan, for example, could reduce your monthly payment by roughly $175 or more. Use our refinance calculator to run your specific numbers.

If you are a homebuyer, waiting for significantly lower rates is a gamble. Lower mortgage rates tend to increase buyer demand, which can push home prices higher and offset any savings on borrowing costs. Many financial advisors suggest buying when you can comfortably afford to and then refinancing later if rates drop.

According to the CFPB, shopping around with multiple lenders is one of the most effective ways to secure a lower mortgage rate, regardless of where the broader market stands. Even within the same rate environment, offers can vary by 0.5 percentage points or more between lenders. You can compare refinance offers on Wirly to see options side by side.

Risks and Considerations Before You Refinance

Refinancing is not always the right move, even when rates go down. Here are important factors to weigh:

  • Break-even period: Refinancing involves closing costs, typically 2% to 5% of the loan amount. Divide your total costs by your monthly savings to find your break-even point. If you plan to move before reaching it, refinancing may cost you money.
  • Resetting your loan term: Refinancing from your current mortgage into a new 30-year fixed-rate mortgage restarts the amortization clock. This means you will pay more interest over the life of the loan, even at a lower rate. Consider a shorter term if you can afford the payments.
  • Hidden costs: Appraisal fees, title insurance, origination fees, and recording fees add up. Some lenders advertise “no closing cost” refinances but build those costs into a higher interest rate.
  • Credit score impact: Applying with multiple lenders triggers hard inquiries on your credit report. While credit scoring models typically group mortgage inquiries within a 14 to 45 day window as a single inquiry, it is smart to do your rate shopping within a focused timeframe.
  • Rate lock risks: If you lock a rate, it typically expires in 30 to 60 days. If your closing is delayed, you may lose your locked rate. Ask your lender about rate lock extension policies and float-down options.
  • Prepayment penalties: Some existing loans, particularly older ones, may carry prepayment penalties. Check your current loan documents before committing.

According to CFPB complaint data from 2024, the most common mortgage-related consumer complaint category was “trouble during the payment process,” affecting the majority of complaints filed across major servicers. When refinancing, carefully review your new servicer’s payment process and keep documentation of all transactions during the transition period.

How to Get a Low Mortgage Rate Today

Regardless of where the market heads, these steps can help you secure the best rate available:

  1. Improve your credit score. According to the CFPB, your credit score is one of the most significant factors in your interest rate. Pay down balances and correct errors on your report before applying.
  2. Increase your home equity. A lower loan-to-value ratio generally means a lower rate. If your home has appreciated, you may qualify for better terms.
  3. Shop multiple lenders. Get at least three to five quotes. Use Wirly’s rate comparison tool as a starting point.
  4. Consider points. Paying discount points upfront can lower your rate. This makes sense if you plan to stay in the home long enough to recoup the cost.
  5. Choose the right loan term. A 15-year mortgage typically carries a lower rate than a 30-year, though the monthly payment will be higher.

Sources

Disclaimer: This article is for educational purposes only and does not constitute financial advice. Wirly is not a lender or mortgage broker. Mortgage rates change daily, and the figures referenced in this article reflect data available at the time of writing. Consult with a qualified financial professional before making any refinancing or home purchase decisions. Your actual rate and terms will depend on your individual financial situation.

Sources

Written by the Wirly Editorial Team. Last reviewed: March 29, 2026. Fact-checked against Freddie Mac PMMS, FRED March 2025, CFPB consumer guidance, CFPB complaint data 2024, HMDA 2023. See our methodology for how we evaluate lenders.

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This guide is for educational purposes only. Consult a licensed mortgage professional for personalized advice. Wirly is not a lender or mortgage broker.