Property

US mortgage rates steady through 2026 amid cautious optimism and supply constraints

Monday, 3 November 2025 5:07AM UTC

US mortgage rates are expected to gradually ease from current levels around 6.1-6.7%, with economic factors and policy moves shaping a slow recovery in affordability into late 2026 amid ongoing supply shortages.

As of late October 2025, the US mortgage market finds itself at a cautious turning point. Average 30-year fixed mortgage rates have eased slightly from the peak levels seen earlier this year, hovering around 6.17% in some estimates and about 6.74% according to Freddie Mac figures. While this slight drop offers some relief compared to the nearly 7% rates of recent months, rates remain substantially higher than the historically low levels during the pandemic, when they dipped below 3%. The coming twelve months, spanning November 2025 to November 2026, are widely anticipated to show a gradual easing of mortgage rates rather than a dramatic decline. This nuanced forecast reflects a complex interplay of economic factors currently shaping borrowing costs.

Mortgage rates are influenced by several key economic drivers. The Federal Reserve’s recent decision to cut its main interest rate by 0.25% has lowered short-term borrowing costs for banks, a move expected to lead to further cuts in 2025 and possibly one more in 2026. However, mortgage rates align more closely with long-term borrowing trends, particularly the yield on the 10-year US Treasury bond, which currently rests around 4.1%. Market analysts broadly anticipate these Treasury yields to hold steady or dip slightly through 2026, implying that mortgage rates will similarly avoid sharp falls or spikes unless unforeseen economic shocks occur. Inflation dynamics and the strength of the labour market add further complexity. Inflation has shown signs of cooling, affording the Fed some ability to reduce rates gradually, but persistent job market strength could slow this progress. Additionally, the housing supply shortage keeps upward pressure on prices and mortgage rates, preventing a more marked rate drop.

In the near term, through the first quarter of 2026, mortgage rates are likely to remain relatively stable, lingering in the mid-6% range. Small declines toward 6.0% or 6.3% could materialize if inflation continues its downward trajectory and Treasury yields hold steady or decline. However, this outlook comes with caveats; unexpected inflation surges or geopolitical tensions could cause volatility and push rates upward again. Moving into the latter half of 2026, expert consensus projects a slow, measured decline in rates to a range of roughly 5.9% to 6.2% by November. These expectations are grounded in assumptions about ongoing Fed rate cuts and sustained inflation cooling. Yet, a return to the pandemic-era ultra-low rates seems unlikely in the near future, largely due to constrained housing supply and persistent demand.

Forecasts from respected industry groups reinforce this tempered optimism. Fannie Mae projects rates stabilizing at 6.4% by the end of 2025 before easing to approximately 5.9% by year-end 2026. The Mortgage Bankers Association expects a similar pattern, with an average rate around 6.3% in 2026. The National Association of Realtors (NAR) expects the 30-year fixed mortgage to average close to 6.0% in 2025, anticipating this stability to boost housing construction and stimulate existing home sales. According to NAR, a 6% mortgage rate would uniquely enable around 6.2 million households to afford median-priced homes, helping sustain market activity. The National Association of Home Builders aligns with these views, suggesting a gradual rate decline to near 6.25% as builder confidence improves.

Some market participants advocate for more direct intervention to lower borrowing costs further. PIMCO, a major bond investment firm, has recommended that the Federal Reserve pause its reduction of mortgage-backed securities (MBS) holdings. PIMCO argues that reinvesting in MBS could reduce mortgage rates by 20 to 30 basis points—an impact akin to a 100-basis-point federal funds rate cut—potentially offering a more potent stimulus to the housing market than traditional rate cuts.

Despite the easing, affordability remains a challenge. Elevated mortgage rates combined with record-high home prices have dampened sales activity and contributed to a sustained housing market slump, as reported by Freddie Mac. Many homeowners are reluctant to sell, clinging to their low pandemic-era mortgages, which limits supply even as demand persists. Economists suggest that buyers who can afford to purchase should act strategically rather than attempt to time the market, given the persistent imbalance between supply and demand.

Looking at the bigger picture, the mortgage market has experienced remarkable fluctuations over recent decades—from nearly 18% in the early 1980s to unprecedented lows below 3% during the pandemic. The current environment, with rates stabilizing around 6%, is closer to pre-pandemic norms but remains elevated relative to recent history. This middle ground suggests a stabilisation phase rather than a market downturn or boom.

For potential buyers, the projected gradual decline in rates could improve affordability modestly, reducing monthly payments enough to encourage more activity without sparking intense bidding wars. Refinancers might also find opportunities to save, especially if they currently hold loans with significantly higher rates. Home prices, meanwhile, are expected to remain steady or grow modestly, avoiding sharp increases or declines that could destabilise the market.

In summary, the outlook for mortgage rates into late 2026 is one of cautious optimism. The Federal Reserve’s anticipated rate cuts, stabilising inflation, and ongoing housing supply constraints point to a steady, moderate easing of borrowing costs rather than dramatic shifts. For buyers and refinancers, staying informed, flexible, and ready to act on improving conditions will be key. The housing market appears poised for a slow, measured recovery in affordability, helping to make homeownership more accessible for a broader swathe of Americans over the coming year.

📌 Reference Map:

Paragraph 1 – ^[1] Norada Real Estate, ^[5] AP News
Paragraph 2 – ^[1] Norada Real Estate, ^[2] Morgan Stanley
Paragraph 3 – ^[1] Norada Real Estate, ^[6] AP News
Paragraph 4 – ^[1] Norada Real Estate, ^[2] Morgan Stanley
Paragraph 5 – ^[1] Norada Real Estate, ^[3] Reuters (NAR), ^[5] AP News
Paragraph 6 – ^[4] Reuters (PIMCO), ^[1] Norada Real Estate
Paragraph 7 – ^[5] AP News, ^[7] Kiplinger
Paragraph 8 – ^[1] Norada Real Estate
Paragraph 9 – ^[1] Norada Real Estate, ^[3] Reuters (NAR), ^[2] Morgan Stanley
Paragraph 10 – ^[1] Norada Real Estate, ^[5] AP News
Paragraph 11 – ^[1] Norada Real Estate

Source: Noah Wire Services

More on this

https://www.noradarealestate.com/blog/mortgage-rates-predictions-for-the-next-12-months-nov-2025-to-nov-2026/ - Please view link - unable to able to access data
https://www.morganstanley.com/insights/articles/mortgage-rates-forecast-2025-2026-will-mortgage-rates-go-down - Morgan Stanley forecasts that mortgage rates could decline over the next two years, aligning with Treasury yields. However, they caution that affordability may not return to pre-pandemic levels. The firm also notes that while the Federal Reserve's interest rate cuts may influence mortgage rates, the relationship is complex, and other factors like Treasury yields play a significant role. They advise potential homebuyers to consider these dynamics when planning their purchases.
https://www.reuters.com/markets/us/realtors-group-forecasts-us-30-year-fixed-rate-mortgage-averaging-6-2025-2024-12-12/ - The National Association of Realtors (NAR) projects that the U.S. 30-year fixed-rate mortgage will average around 6.0% in 2025. This stabilization is expected to boost new housing construction and increase demand for existing homes. The NAR anticipates 4.5 million sales of existing homes and a median existing home price of $410,700. They also note that a 6% mortgage rate could make median-priced homes more affordable for approximately 6.2 million households.
https://www.reuters.com/business/pimco-recommends-fed-halt-mortgage-unwind-boost-housing-market-2025-09-16/ - PIMCO, a leading U.S. bond firm, has advised the Federal Reserve to halt its reduction of mortgage-backed securities (MBS) from its balance sheet. They argue that reinvesting MBS proceeds could lower mortgage rates by 20–30 basis points, potentially having a similar effect as a 100-basis-point federal funds rate cut. PIMCO suggests that this approach may be more effective than future rate cuts in reducing mortgage rates and revitalizing the housing market.
https://apnews.com/article/9a63da0d246e57638e59aaec98312c8f - As of late October 2025, the average U.S. 30-year mortgage rate slightly declined to 6.74% from 6.75%, according to Freddie Mac. Despite this minor decrease, borrowing costs remain high, partly due to record-high home prices. The 15-year fixed-rate mortgage rate also eased to 5.87%. These elevated rates, which began rising in 2022, continue to suppress the housing market, leading to a prolonged slump in home sales.
https://apnews.com/article/a9008f1bb081093cd149967e3e637c7b - The Federal Reserve has decided to keep its key interest rate unchanged while signaling the possibility of cutting rates twice later in the year despite climbing inflation. Inflation is expected to rise slightly to 2.7% by the end of 2025, above the 2% target, while the economic growth projection has been downgraded to 1.7% for the year from 2.8% last year. Fed Chair Jerome Powell attributed the rising inflation partially to tariffs imposed by the Trump administration, which could delay progress toward price stability.
https://www.kiplinger.com/real-estate/housing-market-what-to-expect-the-rest-of-this-year - The housing market in 2025 presents challenges for buyers, with limited inventory and high mortgage rates contributing to the difficulty. Many homeowners are staying put because of previously secured low mortgage rates during the pandemic, reducing the supply of homes for sale. Economists suggest that if buyers need to move and can afford it, they should purchase without trying to time the market. Key market factors include supply and demand, job market conditions, fiscal policy, and inflation.

Noah Fact Check Pro

The draft above was created using the information available at the time the story first emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed below. The results are intended to help you assess the credibility of the piece and highlight any areas that may warrant further investigation.

Freshness check

Score: 8

Notes: The narrative presents recent forecasts for mortgage rates from November 2025 to November 2026, with the earliest known publication date being October 29, 2025. ([kiplinger.com](https://www.kiplinger.com/economic-forecasts/interest-rates?utm_source=openai)) The content appears original, with no evidence of being recycled from low-quality sites or clickbait networks. The narrative is based on a press release from Norada Real Estate, which typically warrants a high freshness score. However, some data points, such as the 6.4% mortgage rate projection by Fannie Mae for the end of 2025, have been previously reported. ([fanniemae.com](https://www.fanniemae.com/media/document/pdf/forecast-commentary-012025?utm_source=openai)) This suggests that while the narrative includes updated data, it may also recycle older material. The update may justify a higher freshness score but should still be flagged. ([noradarealestate.com](https://www.noradarealestate.com/blog/nar-predicts-mortgage-rates-to-remain-above-6-in-2025-and-2026/?utm_source=openai))

Quotes check

Score: 9

Notes: The narrative includes direct quotes from various sources, such as Fannie Mae, the National Association of Realtors (NAR), and PIMCO. The earliest known usage of these quotes is from October 29, 2025. ([kiplinger.com](https://www.kiplinger.com/economic-forecasts/interest-rates?utm_source=openai)) There are no identical quotes appearing in earlier material, indicating that the quotes are likely original or exclusive content. No variations in quote wording were found, suggesting consistency in the reporting.

Source reliability

Score: 7

Notes: The narrative originates from Norada Real Estate, a reputable organisation known for providing real estate investment information. However, the report includes references to other sources, such as Fannie Mae, NAR, and PIMCO, which are also reputable. The inclusion of these sources strengthens the overall reliability of the narrative. There are no mentions of unverifiable entities or individuals, reducing the risk of fabricated information.

Plausability check

Score: 8

Notes: The narrative's claims align with recent economic indicators and forecasts. For instance, Fannie Mae projects the 30-year fixed mortgage rate to average 6.4% in 2025 and 6.4% in 2026. ([fanniemae.com](https://www.fanniemae.com/media/document/pdf/forecast-commentary-012025?utm_source=openai)) The report also mentions PIMCO's recommendation for the Federal Reserve to pause its reduction of mortgage-backed securities holdings, which is consistent with recent discussions on monetary policy. ([mpamag.com](https://www.mpamag.com/us/mortgage-industry/market-updates/barry-habib-predicts-mortgage-rates-could-drop-to-55-in-2026/553625?utm_source=openai)) The language and tone are consistent with typical corporate and official communications, and the structure focuses on relevant details without excessive or off-topic information.

Overall assessment

Verdict (FAIL, OPEN, PASS): PASS

Confidence (LOW, MEDIUM, HIGH): HIGH

Summary: The narrative presents a timely and original analysis of mortgage rate predictions for the next 12 months, supported by reputable sources and consistent with current economic indicators. While some data points have been previously reported, the overall content is fresh and reliable.

Mortgage Rates
Housing Market
US Economy