If you've been waiting for mortgage rates to drop into the 5s before you buy or refinance, you've been waiting since 2022. With rates currently around 6.30% on the 30-year fixed (Freddie Mac PMMS, April 30, 2026), the question is fair: how much further could they realistically fall in the rest of 2026?
We pulled the three forecasts that influence the market most. Here's what each one says.
Fannie Mae's view: gradual decline, with rates ending 2026 in the 5.6%-6.0% range
Fannie Mae's Economic and Strategic Research group is one of the most-watched forecasters in housing because Fannie buys or guarantees a huge share of all U.S. mortgages. Their April 2026 outlook calls for:
- Q1 2026: 30-year fixed averaging around 6%
- Q2-Q3 2026: Gradual decline to 5.8-5.9%
- Q4 2026 to Q2 2027: Continued decline toward 5.6%
Fannie's forecast is built on the assumption that the Fed cuts rates 2-3 times in 2026 (totaling 0.50-0.75%) and that 10-year Treasury yields drift lower in response.
MBA's view: range-bound through 2026 at 6.1%-6.3%
The Mortgage Bankers Association is more conservative. Their forecast keeps the 30-year fixed in a tight band:
- 2026 average: 6.1%-6.3%
- End of 2026: 6.0%-6.2%
- 2027 outlook: Continued slow decline toward 5.8%
The MBA's reasoning: even with Fed cuts, mortgage rates are anchored to the 10-year Treasury, which is determined more by long-term inflation expectations and term premium than by the Fed funds rate. Their view is that long-term rates are sticky and the spread between Treasuries and mortgages stays elevated for structural reasons.
Morgan Stanley's view: a deeper but temporary dip to 5.5%-5.75%
Morgan Stanley's mortgage strategists are the most optimistic of the three. Their forecast is rate-dependent but intriguing:
- If the 10-year Treasury drops to about 3.75% by mid-2026, the 30-year mortgage rate could touch 5.50%-5.75% briefly
- However, they expect rates to rise again in the second half of 2026 as inflation pressures return
- Their year-end 2026 estimate: back in the 6% range
Morgan Stanley's view essentially says there could be a narrow window mid-year where refinancing makes sense for borrowers stuck above 7%, but it won't last.
What we tell clients: if you wait for the 5s before buying or refinancing, you might be waiting until late 2026, you might be waiting until 2027, or you might miss it entirely if the Morgan Stanley dip-then-rise scenario plays out. Plan for rates in the low-6s and treat anything lower as a bonus.
What could push rates lower than expected
- Inflation cooling faster than expected. Core PCE running consistently below 2.5% would give the Fed room to cut more aggressively.
- Labor market weakening. A meaningful rise in unemployment would accelerate the Fed's cutting cycle.
- Geopolitical risk-off. Major global instability tends to push money into U.S. Treasuries, dropping the 10-year yield and pulling mortgage rates with it.
What could push rates higher than expected
- Inflation reacceleration. A spike in oil prices, a weaker dollar, or supply chain disruption could re-ignite inflation and force the Fed to pause or reverse.
- Tariff-driven price pressure. Trade policy changes can flow into goods inflation quickly.
- Treasury auction stress. If long-term Treasury demand weakens (foreign central banks selling, fiscal concerns), 10-year yields rise and mortgage rates follow.
What this means for your decision
If you're buying: Don't time the market. Run our Cost of Waiting calculator with your actual numbers. The home price increase often outweighs the rate decrease in any given year.
If you're refinancing from a rate above 7.25%: There's enough savings on the table at today's rates to do the math. Don't wait for a forecast that might not happen.
If you're refinancing from a rate of 6.0-6.5%: You probably need rates closer to 5.5% to clear closing costs in a reasonable break-even. Wait for the Morgan Stanley scenario or Fannie's late-2026 dip.
We update our rate commentary every Thursday after the Freddie Mac PMMS release. Bookmark our blog if you want to stay current.