Mortgage Rates Seen Staying Above 7% Through 2027
An MBA economist expects higher Treasury yields and tighter monetary policy to keep borrowing costs elevated.
Mortgage rates may stay above 7% through 2027, according to Mike Fratantoni, chief economist at the Mortgage Bankers Association. He projects the 30-year rate will average 7.3% during the final quarter of 2026. Freddie Mac reported a recent average of 7.40%, the highest level in three years.
Fratantoni expects the Federal Reserve to raise its benchmark rate twice more: once in December and again during the first quarter of 2027. Those increases would put the federal funds rate between 4.25% and 4.5%. He also expects the 10-year Treasury yield, an important reference point for mortgage lending, to average 5.1% late next year and stay near 5% during 2027.
The MBA projects 5 million mortgage loans in 2027, down from 5.3 million in 2026. Purchase activity is expected to soften, while refinancing would decline more sharply. Buyers who remain active are increasingly using adjustable-rate mortgages or paying discount points. ARM applications averaged nearly 10% recently and are expected to stay above 9% through 2027. Slower population growth and reduced immigration could ease housing demand, while fewer new homes may limit supply. National price growth is expected to slow in 2027 before strengthening gradually in 2028.
- Realtor.com News