Mortgage Rates Expected to Move Lower in 2025 and 2026

Rhea-AI Summary

Fannie Mae (FNMA) has revised its mortgage rate forecast, now projecting rates to end at 6.3% in 2025 and 6.2% in 2026, representing downward revisions of 0.3 percentage points for both years. This adjustment has led to a slight upgrade in the existing home sales forecast for 2025, although overall home sales expectations remain modest.

The Economic and Strategic Research (ESR) Group forecasts real GDP growth of 1.7% in 2025 and 2.1% in 2026 on a Q4/Q4 basis, marking modest downward revisions due to weaker data and trade policy clarity. According to Mark Palim, Fannie Mae's Senior Vice President and Chief Economist, mortgage rates are expected to decrease further within the next quarter, potentially stimulating additional sales from hesitant buyers.

Positive

• Mortgage rates forecast revised downward by 0.3 percentage points for both 2025 and 2026
• Slight improvement expected in existing home sales forecast for 2025
• Positive GDP growth projections maintained at 1.7% for 2025 and 2.1% for 2026

Negative

• Overall home sales expectations remain subdued despite rate improvements
• GDP growth forecasts revised downward due to weaker incoming data
• Economic growth projected to be modestly slower in the near term

News Market Reaction – FNMA

-4.42%

-4.42% Session move

In the trading session that priced this news, FNMA declined 4.42%, reflecting a moderate negative market reaction.

Data tracked by StockTitan Argus on the day of publication.

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Existing Home Sales Forecast Upgraded Slightly on Lower Rate Outlook

WASHINGTON, March 28, 2025 /PRNewswire/ -- Mortgage rates are now expected to end 2025 and 2026 at 6.3 percent and 6.2 percent, respectively, downward revisions of three-tenths for each, according to the March 2025 commentary from the Fannie Mae (OTCQB: FNMA) Economic and Strategic Research (ESR) Group. The lower mortgage rate outlook resulted in a small upward revision to the ESR Group's existing home sales outlook in 2025, though expectations for total home sales remain subdued. On a Q4/Q4 basis, real gross domestic product (GDP) is now expected to be 1.7 percent in 2025 and 2.1 percent in 2026, modest downward revisions owing to weaker incoming data and greater clarity on trade policy.

"We expect the recent pullback in mortgage rates will provide a small boost to home sales this year," said Mark Palim, Fannie Mae Senior Vice President and Chief Economist. "While our latest forecast calls for a period of modestly slower economic growth, historically, interest rates have been the most important driver of home sales. We think mortgage rates will move even lower within the next quarter and ultimately close the year at approximately 6.3 percent, which could be low enough to generate some extra sales from any would-be buyers still waiting on the sidelines."

Visit the Economic and Strategic Research site at fanniemae.com to read the full March 2025 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, and Housing Forecast. To receive e-mail updates with other housing market research from Fannie Mae's Economic and Strategic Research Group, please click here.

Opinions, analyses, estimates, forecasts, beliefs, and other views of Fannie Mae's Economic and Strategic Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, beliefs, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, beliefs, and other views published by the ESR Group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

About the ESR Group
Fannie Mae's Economic and Strategic Research Group, led by Chief Economist Mark Palim, studies current data, analyzes historical and emerging trends, and conducts surveys of consumer and mortgage lender groups to provide forecasts and analyses on the economy, housing, and mortgage markets.

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SOURCE Fannie Mae

FAQ

What are Fannie Mae's (FNMA) projected mortgage rates for 2025 and 2026?

Fannie Mae forecasts mortgage rates to end at 6.3% in 2025 and 6.2% in 2026, both revised downward by 0.3 percentage points.

How will FNMA's revised mortgage rate forecast impact home sales in 2025?

The lower mortgage rate outlook has led to a small upward revision in existing home sales forecast for 2025, though overall home sales expectations remain subdued.

What is Fannie Mae's GDP growth forecast for 2025-2026?

Fannie Mae projects real GDP growth of 1.7% in 2025 and 2.1% in 2026 on a Q4/Q4 basis, reflecting modest downward revisions.

When does FNMA expect mortgage rates to decrease further?

Fannie Mae expects mortgage rates to move lower within the next quarter, ultimately reaching approximately 6.3% by year-end 2025.