Where we are now with mortgage rates?

Mortgage rates have remained above 6% since 2022, largely driven by the Federal Reserve’s efforts to control inflation. While the Fed does not directly set mortgage rates, its policies and statements influence the bond market, which in turn affects long-term mortgage pricing.Fannie Mae’s new forecast signals that inflation is cooling and market conditions are stabilizing. As inflation continues to slow, bond yields may ease, creating the environment needed for mortgage rates to trend downward. What does this mean for homebuyers?Affordability may begin to improve.If mortgage rates fall under 6%, homebuyers could regain some purchasing power. On a $350,000 home, a half-percent drop could mean a monthly payment that is $100 to $150 lower, depending on loan terms and credit profile.Refinancing could become more attractive.Homeowners who purchased or refinanced at higher rates in recent years may have an opportunity to lower their payment or shorten their loan term as rates decline.Housing activity is expected to increase.Fannie Mae predicts total home sales could climb from roughly 4.7 million in 2025 to 5.1 million in 2026. A gradual improvement in affordability and confidence could bring more buyers and sellers back into the market. What could change the forecast?

Factor	Could lower rates	Could raise rates
Inflation	Continued cooling and stable prices	A rebound in inflation or energy costs
Federal Reserve	Rate cuts or softer policy tone	Delayed rate cuts or new tightening
Economic growth	Slower growth or mild recession	Strong job market and spending
Global events	Stable financial markets	Political or economic uncertainty

Forecasts are based on current data and market expectations. Any major change in inflation, employment, or global conditions could shift the outlook quickly. How to prepare for the next two yearsRather than waiting for the “perfect” rate, buyers should focus on being ready when opportunities appear. Staying pre-approved, maintaining strong credit, and knowing your budget are key to moving quickly when the right home and rate align.If you already own a home, keep an eye on mortgage trends through 2025 and 2026. A refinance could make sense if you can save at least one percent or shorten your loan term without extending your payoff timeline.At Fairway Heartland, our team of Mortgage Advisors monitor daily rate trends and work with clients to create a personalized plan that fits both current conditions and future opportunities. The bottom lineWhile no one can predict the market with complete certainty, Fannie Mae’s latest report offers encouraging news. Mortgage rates under 6% would ease affordability challenges and bring new energy to the housing market. Whether you are planning to buy, refinance, or simply explore your options, staying informed now can help you take advantage when the time is right. Ready to plan your next move?Whether you are buying your first home, upgrading, or refinancing, the Fairway Heartland team is here to guide you every step of the way with trusted advice and fast, local service.