Fannie Mae's New Mortgage Forecast Changes the Housing Outlook

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Mortgage rates may be staying higher for longer. Fannie Mac has significantly raised its latest mortgage rate forecast, now expecting the average 30-year fixed mortgage rate to reach 6.8% in the fourth quarter of 2026 and remain around 6.8% through the first half of 2027. That is a major change from its previous forecast which expected rates closer to the low 6% range. So, what changed? One factor is inflation and energy prices. Higher oil and energy costs can put renewed pressure on inflation, which can push long-term bond yields higher. Another factor is the US government's borrowing needs.