Two major forecasters now expect mortgage rates to stay above 7% through 2027. Fannie Mae's October 2026 housing forecast projects the 30-year fixed rate averaging 7.5% in every quarter of 2027, up from 6.7% a month earlier, while the Mortgage Bankers Association expects rates to remain above 7% next year. Both trimmed their outlooks for 2027 lending.
Fannie Mae raises its 2027 rate forecast to 7.5%
Fannie Mae's Economic and Strategic Research (ESR) group raised its mortgage rate outlook sharply in its October 2026 housing forecast. As reported by CNBC on Oct. 14, the group now projects the 30-year fixed rate averaging 7.4% in the fourth quarter of 2026 and 7.5% throughout 2027. The September forecast had 6.8% and 6.7%, respectively.
According to Scotsman Guide, Fannie Mae now expects the 10-year Treasury yield to end 2026 around 5.3%, compared with 4.8% in its prior forecast. CNBC tied the rise in rates to stubborn inflation, a bond-market sell-off, and the Federal Reserve's September rate increase.
Fewer loans and home sales expected in 2027
Higher rates mean less borrowing. Fannie Mae cut its 2027 single-family origination forecast to $1.86 trillion from $2.28 trillion and now expects about $2.08 trillion in 2026. Refinance volume for 2027 is projected at $430 billion, while purchase lending is projected at $1.43 trillion.
On sales, Mortgage.news reported that Fannie Mae lowered its 2027 total home sales forecast to 4.713 million from 4.882 million, implying growth of just 0.9% instead of 4.1%. The forecast is dated Oct. 12, 2026, with rate inputs as of Sept. 30.
- 30-year rate, Q4 2026: 7.4% (was 6.8%)
- 30-year rate, 2027: 7.5% (was 6.7%)
- 2027 single-family originations: $1.86 trillion (was $2.28 trillion)
- 2027 total home sales: 4.713 million (was 4.882 million)
MBA: rates above 7% and originations down 5%
The Mortgage Bankers Association presented its own outlook at its annual convention in mid-October. MBA expects the 30-year rate to average 7.3% in Q4 2026 and remain above 7% through 2027, with the 10-year Treasury near 5%. It forecasts total single-family originations falling about 5% to just under $2 trillion in 2027, from $2.1 trillion expected in 2026.
MBA sees purchase originations rising 0.8% to $1.42 trillion while refinances drop 17% to $571 billion. Chief Economist Mike Fratantoni said rates "will remain on a higher path than previously forecast, which will be a serious headwind for origination volume." MBA's baseline assumes two more quarter-point Fed hikes, in December 2026 and early 2027.
How to read these forecasts
Forecasts change often. Fannie Mae's 2027 rate call moved 0.8 point in a single month, and since the October forecasts were released, Freddie Mac's weekly average has eased from a 7.40% peak to 7.18% on Nov. 5, 2026. Treat any projection as one scenario, not a promise.
Forecasters also differ on details. Fannie Mae projects 2027 refinance volume of $430 billion; MBA projects $571 billion. Both expect purchase lending around $1.4 trillion, which suggests buyers will keep moving even if refinancing stays muted. MBA Deputy Chief Economist Joel Kan said buyers are "increasingly turning to ARM loans or paying points" to manage costs.
What this means for Texas borrowers
If forecasters are right and rates stay above 7% through 2027, waiting for a big drop may not pay off, though rates could also fall faster than expected. Texas buyers may want to plan around today's payment rather than a hoped-for rate. Run the numbers in our rate calculator and compare fixed and adjustable options, keeping in mind that ARM rates can rise later.
Programs with lower down payments, such as FHA loans and USDA loans, plus down payment assistance, can help offset higher rates for eligible buyers. First-time buyers can start with our first-time homebuyer guide. If rates do fall later, a refinance may be an option, but there is no guarantee you will qualify or that savings will cover closing costs.
Sources
- Fannie Mae sharply raises mortgage rate forecast for 2027, CNBC (October 14, 2026)
- Fannie Mae just tore up its 2027 mortgage forecast, Scotsman Guide (October 14, 2026)
- Fannie Mae's October Outlook Cuts 2027 Home Sales and Origination Forecasts, Mortgage.news (October 15, 2026)
- MBA Forecast: Mortgage Originations to Decrease 5% in 2027 as Mortgage Rates Remain Above 7%, Mortgage Bankers Association (October 14, 2026)
- Primary Mortgage Market Survey, Freddie Mac (November 5, 2026)
This article is for general information about the mortgage market and is not financial, legal or tax advice. Figures come from the sources listed and may have changed since publication. Rates and averages cited are published market data, not an offer or HomyLoan rates. HomyLoan, LLC is a licensed mortgage broker, Company NMLS 2783307, not a lender. All loans are subject to credit approval and program guidelines. Equal Housing Opportunity.
