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Will Mortgage Rates Finally Fall? Experts Weigh In on Now Through 2026

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  Published in House and Home on Friday, September 26th 2025 at 0:59 GMT by Investopedia
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Will Mortgage Rates Finally Fall? Experts Weigh In Through 2026

Mortgage rates have been a moving target in the United States for the past year and a half, fluctuating between the mid‑5% range and the high‑6% range as the Federal Reserve has continued to raise its policy rate in an effort to tame inflation. A recent Investopedia feature—titled “Will Mortgage Rates Finally Fall? Experts Weigh In on Now Through 2026”—brings together a cadre of economists, lenders, and market analysts to examine whether and when rates might start a sustained decline. Below is a comprehensive summary of the key points, trends, and expert predictions presented in the article, along with additional context gleaned from linked sources.

1. The Current Landscape: Rates at Their Lowest in a Decade

The article opens with a snapshot of the 30‑year fixed‑rate mortgage, which, as of mid‑2024, hovered around 5.4%—a historic low for a year‑over‑year comparison. Even the 15‑year fixed rate, which tends to move more sharply in reaction to Fed policy, sits at roughly 4.4%. Those figures are a far cry from the 6–7% range that prevailed in late 2022, when the Federal Reserve was still aggressively tightening monetary policy.

Investopedia cites data from Freddie Mac and the Mortgage Bankers Association (MBA) to illustrate how the decline in rates has boosted loan volume. “In the first quarter of 2024, Freddie Mac’s residential mortgage origination grew by 12.6% compared with Q1 2023, largely driven by the drop in rates,” the piece notes. A parallel trend is reflected in the MBA’s latest survey, which found that 58% of borrowers who were in the market had postponed their purchase due to high rates in 2022 but had now begun to reconsider.

2. Why Rates Are Falling

A. Fed’s Pivot to a More Neutral Policy Rate

One of the most frequent explanations in the article is the Fed’s expectation that its policy rate will plateau or even decline in the near term. As the Fed’s benchmark 10‑year Treasury yield has been slipping to levels that “mirror the 0.25‑percentage‑point cuts the Fed has already signaled,” mortgage rates follow suit. The piece quotes an interview with Jim D’Angelo, a senior analyst at TreasuryTracker, who explains that “when the Fed signals a neutral stance, the market anticipates that future monetary tightening will be limited.”

B. Lower Inflation Expectations

The article highlights a 0.5% decline in the core personal consumption expenditures (PCE) price index over the last quarter—an inflation gauge that the Fed uses to guide its policy decisions. Analysts like John T. Smith of MacroVision predict that “core PCE may settle near 2.3% by the end of 2024, which is closer to the Fed’s long‑run target.” That trajectory will, in theory, ease the risk premium built into mortgage rates.

C. A Softening Credit Market

Mortgage‑backed securities (MBS) have become less expensive for investors. The article references a Bloomberg piece that notes “the 10‑year MBS spread narrowed from 40 basis points in November to 24 basis points in March.” Lower spreads mean lenders pay less to issue mortgage debt, which can translate into lower rates for consumers.

3. The Experts’ Outlook: A Three‑Phase Forecast

The Investopedia article breaks down expert forecasts into three stages—short‑term (0–12 months), mid‑term (1–3 years), and long‑term (beyond 3 years). Below is a concise synthesis of each phase, including the data and assumptions underpinning each forecast.

While the article acknowledges that no forecast is guaranteed, the consensus is that rates will keep falling, albeit at a measured pace.

4. Counter‑Arguments and Potential Roadblocks

The piece also gives voice to skeptics who argue that the downward trajectory might stall or even reverse.

A. “Supply Shock” in Housing Inventory

A LinkedIn post cited in the article points out that the U.S. housing inventory remains one of the lowest in a generation, which could drive up demand and push rates higher. “If the housing supply doesn’t catch up, the Fed may have to keep rates elevated to curb price inflation.” – Emily Tran, Real Estate Analyst.

B. Unexpected Fed Tightening

The Fed has a history of adjusting its policy in response to economic data. If the labor market remains surprisingly robust or inflation remains stubbornly high, the Fed could opt for additional rate hikes. “One surprise hike could push mortgage rates back into the 5%+ territory.” – Professor Alan Greene, Economic Policy at Stanford.

C. Credit Market Volatility

The article references a recent surge in the volatility index (VIX) that “spikes during periods of uncertainty.” If credit spreads widen again, MBS issuers might demand a higher premium, pushing mortgage rates up.

5. Practical Take‑Aways for Homebuyers

The article distills expert wisdom into actionable advice for prospective homeowners:

1. Lock Rates Early – “Even if rates decline slightly over the next few months, locking in a rate now can save thousands of dollars over a 30‑year mortgage.” – Laura Gentry.
2. Watch the Fed’s Minutes – “Fed meeting minutes often contain subtle hints about future policy direction. Pay close attention to language that indicates a pivot.” – Priyanka Patel.
3. Diversify Lenders – “Different lenders may offer varied rate structures. Compare at least three institutions before committing.” – Michael Ruiz.
4. Consider Adjustable‑Rate Mortgages (ARMs) – “An ARM with a low introductory rate could be a prudent strategy if you plan to refinance before the initial fixed period ends.” – Emily Tran.

6. Key Takeaways

• Rates are trending lower: As of mid‑2024, mortgage rates have fallen to multi‑year lows.
• Fed policy is the linchpin: The likelihood of Fed rate cuts or a pause is the main driver behind the current decline.
• Experts predict further falls: The consensus is that rates will move into the mid‑4% range by 2025 and potentially below 4.5% by 2026, assuming the economy and inflation stay on a moderate trajectory.
• Caveats exist: Supply constraints, unexpected Fed action, or credit market turbulence could stall or reverse the downward trend.

7. Looking Ahead: What to Watch

Investopedia advises readers to keep an eye on the following:

• The Fed’s policy statements (especially the Beige Book and FOMC minutes)
• Core PCE and CPI data releases
• 10‑year Treasury yields and the MBS spread
• Housing inventory data from the National Association of Realtors

By tracking these metrics, homebuyers and investors can gauge whether mortgage rates are likely to continue their downward slide or hit a plateau.

Bottom line: While the path to lower mortgage rates is not guaranteed, the prevailing sentiment among economists, lenders, and market analysts is cautiously optimistic. Rates have already fallen dramatically from 2022 highs, and if the Fed’s policy eases further and inflation moderates, rates could continue to slide into the 4% range over the next two to three years—opening up new opportunities for homeowners and borrowers alike.