Mortgage Rates Stuck Above Six Percent, Forecasts Offer Little Relief

Mortgage rates have settled into a narrow but stubborn range that is keeping borrowing costs high and dampening activity in the housing market. Two leading industry forecasts released in October illustrate the split view among analysts, yet they converge on one important point. The Mortgage Bankers Association expects the 30 year fixed rate to stay at about 6.4 percent through 2026 and to end 2027 around 6.3 percent, while Fannie Mae projects a more hopeful outcome with rates falling to about 5.9 percent by the end of next year. Both forecasts nonetheless predict mortgage rates will remain above 6 percent throughout 2025.

Those projections sit against recent market behavior that shows little volatility. Freddie Mac data for the 52 week period ending November 13, 2025 shows the 30 year fixed mortgage traded between 6.17 percent and 7.04 percent, and the 15 year fixed mortgage ranged from 5.41 percent to 6.27 percent. The narrow band underscores how closely mortgage rates are tracking Treasury yields and the premium that lenders charge over those benchmarks.

The persistence of rates above 6 percent has tangible consequences for affordability. Home prices have risen steadily for more than a decade. Federal Reserve Bank of St. Louis data shows the median sale price of single family homes was $208,400 in the first quarter of 2009 and climbed to $410,800 by the second quarter of 2025. For a typical purchase at that median price, using a 20 percent down payment, a 30 year fixed loan at 6.4 percent would produce a monthly principal and interest payment of roughly $2,060, while a rate of 5.9 percent would reduce that payment to about $1,950. The narrower gap in monthly cost, while meaningful, does not fully offset the long term drift in prices that has eroded affordability.

Why rates have been slow to move is a question of macroeconomic signals and market mechanics. Lenders set mortgage rates in relation to Treasury yields and the spreads that reflect credit and liquidity costs. The Federal Reserve's policy path remains the critical wild card. If inflation remains sticky and the labor market tight, the Fed is less likely to cut interest rates, keeping Treasury yields higher and mortgage rates near current levels. If inflation cools and the Fed pivots to cuts, borrowing costs could fall modestly, a scenario closer to Fannie Mae's outlook.

The market implications are clear. Elevated rates suppress refinancing volumes and reduce buying power for prospective homeowners, which in turn can slow sales and weigh on housing construction. That dynamic limits inventory turnover and can sustain upward pressure on prices even as demand softens. For existing homeowners with low locked in rates, the incentive to move remains low, which further constrains supply.

Forecasts will hinge on incoming inflation readings, labor market reports, and Federal Reserve signals over the next several quarters. For buyers and policymakers alike, the immediate outlook is one of cautious planning. A modest decline to near 6 percent would help some households, but reversing the long term affordability strains created by doubled median prices since 2009 will require a broader shift in supply and demand conditions over years rather than months.