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If Fannie Mae’s prediction is correct, house hunters who delay buying a home until later in the year could be rewarded with lower rates. But waiting until 2026 might not bring much relief.
That’s the upshot of a housing report released Friday by Fannie Mae, a government-sponsored enterprise that buys mortgages to ensure ongoing financing availability for homebuyers. The report forecasts the average rate for a 30-year home loan to fall from 6.8% at the beginning of the year to 6.3% in the last quarter.
"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,” said Mark Palim, Fannie Mae Senior Vice President and Chief Economist, in a press release.
But after that, Fannie Mae's analysts predict rates will flatten out in 2026, perhaps sliding only a tenth of a point further to 6.2%.
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The Impact of a Half Point Reduction in Mortgage Rates
What will you save by locking in a mortgage that is half a percentage point below the rates of today? It depends on the size and type of loan. Even for a modest mortgage of $200,000, you could save $66 per month with a half-point in rate. This may not seem like a big deal, but it adds up to almost $800 per year.
As you can see, a larger loan will have higher monthly payments but also more significant savings. For a $400,000 mortgage, the monthly reduction could be $132. This would result in an annual saving of more than $1500.
| Savings on your monthly mortgage payment from a half point rate reduction | ||||
|---|---|---|---|---|
| Loan amount | Monthly Payment at 6.80% | Monthly payment at 6.30% | Savings per month | Savings per annum |
| $200,000 | $1,304 | $1,238 | $66 | $791 |
| $300,000 | $1,956 | $1,857 | $99 | $1,186 |
| $400,000 | $2,608 | $2,476 | $132 | $1,582 |
| $500,000 | $3,260 | $3,095 | $165 | $1,977 |
| $600,000 | $3,912 | $3,714 | $198 | $2,373 |
| $700,000 | $4,563 | $4,333 | $231 | $2,768 |
| $800,000 | $5,215 | $4,952 | $264 | $3,163 |
Today’s Mortgage Rate News
We cover mortgage rates for both new home purchases and refinances every business day. You can find our most recent rate reports here.
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The national and state averages cited above are provided as is via the Zillow Mortgage API, assuming a loan-to-value (LTV) ratio of 80% (i.e., a down payment of at least 20%) and an applicant credit score in the 680–739 range. The rates are what borrowers can expect to receive from lenders when they get quotes based on their qualifications. These rates may differ from teaser rates advertised. © Zillow, Inc., 2025. Zillow’s Terms of Service apply.
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Fannie Mae. "Economic Developments–March 2025: Mortgage Rates Expected to Move Lower in 2025 and 2026." Released March. 28, 2025.
