Mortgage rates dipped slightly this week, but forecasts suggest borrowing costs will remain elevated through the end of 2026 and into next year.
The average 30-year fixed mortgage declined from 6.67% to 6.65%, according to Freddie Mac, but remains near its highest level of the year. Mortgage News Daily measured the daily average at 6.76% on August 20. Volatility in the bond market, along with concerns about government deficits, inflation and economic uncertainty, could place additional upward pressure on rates.
Fannie Mae now forecasts mortgage rates will reach 6.8% by year-end and remain between 6.7% and 6.8% throughout 2027—a notable increase from its July forecast of approximately 6.4% during the fourth quarter.
Higher rates are continuing to weigh on affordability and buyer activity. Mortgage purchase applications fell 2% from the previous week and are now running below last year’s pace. Fannie Mae also lowered its existing-home sales forecast, projecting an annualized rate of approximately 4.1 million sales into early 2027.
Buyers who remain active may benefit from gradually improving selection. New listings increased 1.2% during the week ending August 16, the strongest weekly gain in three months, as more homeowners accept that rates and buyer demand may not improve soon. However, inventory growth is expected to remain slow.
The outlook presents a difficult tradeoff: Buyers waiting for lower mortgage rates and substantially more inventory are unlikely to get both at the same time.
