💰 Mortgage Rate Forecast 2025–2026: What Fannie Mae Says Comes Next 📊

📉 Fannie Mae Predicts Mortgage Rates to Drop Below 6% by 2026! 🚀

October 06, 2025•3 min read

📉 Fannie Mae Predicts Mortgage Rates to Drop Below 6% by 2026! 🚀

💰 Mortgage Rate Forecast 2025–2026: What Fannie Mae Says Comes Next 📊

Fannie Mae Predicts Mortgage Rates Could Drop Below 6% by 2026 — Here’s What It Means for Investors

Fannie Mae’s latest September 2025 Economic and Housing Outlook has sent ripples across the real estate and mortgage world. After two years of volatile interest rate movement, the government-sponsored enterprise now forecasts that mortgage rates could finally fall below 6% by 2026 — a potential turning point for both homebuyers and commercial real estate investors.

📈 What’s Driving This Forecast?

After the Federal Reserve’s aggressive rate-hiking campaign to tame inflation in 2022 and 2023, inflation has cooled from its 9% peak to near the Fed’s 2% target by late 2024.
This progress allowed the Fed to cut rates for the first time since December 2024, lowering the federal funds rate by 0.25% to a range of 4.0%–4.25% in September 2025.

Despite these cuts, mortgage rates remained stubbornly high, hovering near 7% due to persistent inflationary pressures and investor uncertainty. However, Fannie Mae’s economists now believe the worst may be over.

🏦 Fannie Mae’s Key Mortgage Rate Forecasts

According to Fannie Mae’s ESR (Economic & Strategic Research) Group:

·2025 year-end mortgage rate: 6.4%

·2026 year-end mortgage rate: 5.9%

·Total home sales forecast: 4.72 million (2025) → 5.16 million (2026)

·Single-family mortgage originations: $1.85T (2025) → $2.32T (2026)

·GDP growth forecast: 1.5% (2025) → 2.1% (2026)

·Inflation (CPI): 3.1% in 2025, moderating to 2.6% in 2026

These numbers mark a subtle but significant shift toward stabilization — signaling renewed confidence in the housing and lending markets after several unpredictable years.

🏘️ Affordability: The Main Barrier Still Standing

Despite the optimistic outlook, affordability continues to block many first-time homebuyers and investors from entering the market.
Since 2010, median home prices have roughly doubled, while down payment requirements have surged. Combined with elevated rates, that’s made it difficult for many buyers to qualify for financing.

However, if rates indeed fall below 6% by 2026, housing affordability could improve markedly — spurring both retail home purchases and CRE investment activity. More inventory and stabilizing prices could draw sidelined buyers and investors back into action.

📊 The Federal Reserve’s Next Moves

The Federal Reserve’s September 2025 Summary of Economic Projections indicates more rate cuts are likely ahead, with a median funds rate projection of 3.6% by year-end.
Chairman Jerome Powell emphasized that the Fed’s path remains data-dependent, prioritizing balance between price stability and employment.

As Powell stated, “Labor demand has softened, and job creation is now running below the break-even rate.”
This cautious tone suggests the Fed is willing to cut further if economic conditions warrant — a key factor in bringing mortgage rates lower.

💡 What This Means for CRE Investors and Business Owners

For commercial investors and business owners, this forecast represents a window of opportunity:

·Refinancing leverage: Those with high-rate loans could soon refinance into lower fixed-rate structures.

·New acquisitions: Lower capital costs will improve cap rates and make previously marginal deals pencil again.

·Developer financing: Construction and bridge loan rates could ease, improving project feasibility.

·Portfolio growth: A declining-rate environment historically leads to higher lending activity and greater liquidity in CRE markets.

📅 The Bottom Line

If Fannie Mae’s projections hold true, 2026 could usher in a renewed lending cycle — one that rewards prepared buyers, refinancers, and investors.
Those who act strategically in 2025 — locking in financing, scouting undervalued properties, and building relationships with lenders — will be best positioned to capitalize.

👉 Pro Tip:
Connect with a commercial mortgage advisor who understands both current market volatility and forward-rate strategies. Aligning your investment timing with the Fed’s next moves could mean significant savings over the next cycle.

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https://www.houstonrealestatebrokerage.com/houston-cre-navigator

https://www.commercialexchange.com/agent/653bf5593e3a3e1dcec275a6

http://expressoffers.com/[email protected]

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https://author.billrapponline.com/

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Bill Rapp, CRE Broker

I am a Houston commercial broker, with residential experience, as well as a lending background. I have been in the real estate industry for 14 years and counting, and I have worked in many roles within the industry and each has given me a unique perspective of the industry as a whole. My dedication to clients is rooted in this industry knowledge, but also includes my desire to go the extra mile in networking to source off market opportunities for my clients. Me and my team at eXp Commercial have a cutting-edge technology package that gets the widest exposure for each transaction. eXp Commercial offers a nationwide network through which we can deliver the best exposure and professional advice to achieve our clients’ goals while also minimizing their risk. Clients appreciate my methodical method of discovery in our initial consultation. Through which we can get to know each other and their specific’s business’s needs and objectives on a granular level. Our processes help navigate each transaction and its potential pitfalls through to a successful outcome for our clients. It is my stated goal to provide our clients with extensive market analysis and expertise that fosters innovative solutions and rewarding commercial real estate opportunities.

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