Fannie Mae Now Expects 7.5% Mortgage Rates Through 2027

Fannie Mae's economists no longer expect mortgage rates to come down next year. In the housing forecast they published in October 2026, the 30-year fixed rate averages 7.5% in every quarter of 2027. One month earlier, the same team had projected 6.7%. That is an unusually large change for a single month, and it reshapes the outlook for home sales, prices and refinancing along with it.

A forecast is not a promise, and this one has already been tested by a few weeks of falling rates. But buyers, sellers and owners who were planning around cheaper money in 2027 now have a reason to check their math.

What Changed Between September and October

The figures come from the monthly outlook of Fannie Mae's Economic and Strategic Research Group, as reported by Florida Realtors and Mortgage Professional America. The full tables are posted in the Fannie Mae forecast archive.

• 30-year fixed mortgage rate, 2027 average: 7.5%, up from 6.7%
• 30-year fixed rate, fourth quarter of 2026: 7.4%, up from 6.8%
• Existing-home sales in 2027: 4.06 million, down from 4.22 million
• Total home sales in 2027, including new construction: 4.71 million, down from 4.88 million
• National home price growth in 2027: 0.6%, down from 1%, and well below the 2.7% expected for 2026
• Refinance lending in 2027: $430 billion, down from $802 billion

Total single-family mortgage lending is projected to fall from about $2.09 trillion in 2026 to about $1.87 trillion in 2027, with refinancing shrinking from 31% of loans to 23%.

Why the Forecast Moved So Far

The forecast follows the market. From late August to mid-October, the average 30-year rate in Freddie Mac's weekly survey went eight weeks without a decline and reached 7.40%, the highest since November 2023. The September outlook was written before most of that climb. The October one was written in the middle of it.

Behind the climb are the same forces that have driven rates all year: inflation running well above the Federal Reserve's 2% goal, pushed by energy prices since the conflict with Iran began in late February, and a Fed that responded by raising its benchmark rate in September. The sequence is traced week by week in the report on how the Iran war pushed mortgage rates above 7%.

Fannie Mae Is Not Alone

The Mortgage Bankers Association released its own forecast on Oct. 11 at its annual convention in Chicago, and it points the same direction. According to HousingWire's coverage:

• The MBA expects 30-year rates to stay above 7% through 2027.
• It projects the 10-year Treasury yield, the benchmark lenders price mortgages against, at about 5.1% in late 2026 and near 5% through 2027.
• Its economists expect the Fed to raise rates by a quarter point in December 2026 and again in early 2027.
• Total mortgage lending falls 5% to $1.99 trillion in 2027, with refinancing down 17%.

MBA chief economist Mike Fratantoni told the convention that rates should ease from their recent spike, then added: "The unfortunate news is, I don't think we're going to come down that far." His deputy, Joel Kan, said that with rates between 7% and 7.5%, "it's just very difficult for anyone to really find that justification to refi."

The Forecast Versus Today's Rates

Since those forecasts were written, rates have slipped. Freddie Mac's survey averaged 7.18% on Nov. 5, 2026, the third straight weekly decline. That is already below the 7.4% Fannie Mae penciled in for the fourth quarter.

Two lessons follow. First, forecasts are snapshots. A team that moved its number by eight-tenths of a point in one month can move it back just as fast if inflation cools. Second, nothing in the recent data argues for a quick return to the low 6% range. The October jobs report came in far stronger than expected and raised the odds of a December rate increase, as covered in the analysis of what the jobs report means for mortgage rates.

What 7.5% Instead of 6.7% Costs

Monthly principal and interest on a 30-year fixed loan, before taxes and insurance:

• $300,000 loan: about $1,936 at 6.7% and $2,098 at 7.5%, a difference of $162 a month
• $400,000 loan: about $2,581 at 6.7% and $2,797 at 7.5%, a difference of $216 a month
• $500,000 loan: about $3,226 at 6.7% and $3,496 at 7.5%, a difference of $270 a month

Over a year, the gap on a $400,000 loan is about $2,600. A buyer who qualified comfortably at the old forecast may need a larger down payment, a lower price or a seller concession to reach the same payment at the new one.

What It Means for Buyers

The popular advice of the past few years was to buy the house and refinance when rates fall. The revised forecasts weaken that plan. If rates stay above 7% through 2027, a refinance that lowers the payment enough to cover its closing costs may be years away, so the payment at closing has to be one the household can carry indefinitely.

The flat price forecast changes the calculation too. With home values expected to rise only 0.6% nationally next year, a buyer who needs to sell again within two or three years is unlikely to build enough equity to cover the costs of buying and selling. Buying still makes sense for households planning to stay put. It is harder to justify as a short-term move.

Slower sales have a benefit. Sellers in a slow market are more willing to negotiate, and a seller-paid rate buydown or closing-cost credit can offset part of the higher rate. Home value expectations vary a great deal by region, which is the subject of the report on where Zillow expects prices to rise and fall in 2027.

What It Means for Sellers and Owners

For sellers, the forecast of 4.06 million existing-home sales describes another thin year. Homes priced to the market still sell, but the pool of buyers who can afford a given payment is smaller at 7.5% than at 6.7%, and pricing against last spring's sales is likely to mean sitting.

For owners, the collapse in projected refinancing is the clearest signal. The MBA estimates that only about 20% of outstanding mortgages carry rates above 6%, so most owners have nothing to gain from refinancing at today's levels. Those who need cash for repairs or debt are more likely to look at a home equity loan or line of credit, which leaves the first mortgage untouched. The trade-offs for owners who feel stuck are covered in the piece on mortgage lock-in.

What Would Prove the Forecast Wrong

• Inflation cooling faster than expected. Consumer prices rose 3.7% in the year through September. A run of lower readings would pull bond yields and mortgage rates down.
• Energy prices falling. Both forecasts tie this year's inflation to energy shocks. An easing of Middle East tensions would remove the main source of pressure; an escalation would add to it.
• A weaker job market. The Fed has more room to raise rates when hiring is strong and less when it weakens.
• The spread between mortgages and Treasuries. The MBA puts the gap at about 2.2 percentage points now, down from about 3 points in 2023. If investors demand less extra yield to hold mortgages, rates can fall even if Treasury yields do not.

Fannie Mae updates its forecast every month, and the next revisions will show whether October was a turning point or an overreaction. Rate and market updates are published at Homes For Sale In Mesquite Nevada.