Fannie Mae Updates Mortgage Rate Forecast: What Buyers Need to Know

If you’re thinking about buying a home, it’s important to know what might happen with mortgage rates in the next few years.

Fannie Mae, a big company that helps with home loans, has made a surprising update to its predictions for mortgage rates.

Here’s what you need to know in simple terms.

If you are planning to buy soon, you may also want to review what documents you need for mortgage pre-approval before rates or home prices change again.

Mortgage Rates Stay High Longer Than Expected

In 2022, mortgage rates went up, and many people thought this would be temporary.

However, rates have stayed high for the past three years. This has made it harder for people to buy homes.

Experts had hoped that mortgage rates would go down in 2025, but Fannie Mae has now said that mortgage rates will not drop much over the next two years.

In fact, they expect mortgage rates to stay around 6.8% in 2025, up from a previous forecast of 6.6%. This is bad news for home buyers hoping for lower rates.

You can also compare this with our guide on whether mortgage rates may drop in 2025.

Why Are Mortgage Rates Staying High?

One reason mortgage rates are staying high is inflation (prices for things like food and gas going up).

Inflation is still a problem, which means the Federal Reserve (the group that helps set interest rates) might not lower rates as much as they hoped.

Also, the general economy is uncertain, which keeps rates from going down.

For official updates, you can review Fannie Mae’s Economic and Housing Outlook forecast and the Federal Reserve’s monetary policy information.

Fannie Mae’s New Forecast

Fannie Mae predicts that mortgage rates will stay high for a while, even though they may drop a little in 2026.

They expect rates to be around 6.5% by 2026. But, many buyers believe rates need to be below 5% to feel comfortable buying a home.

If you want to follow current weekly mortgage rate movement, Freddie Mac publishes its Primary Mortgage Market Survey.

Fannie Mae’s Predictions for the Federal Reserve (Fed) Interest Rates

Fannie Mae also updated its prediction for the Federal Reserve’s interest rates. These rates affect mortgage rates, but they are not the same thing.

The Fed was expected to cut interest rates several times in 2025 and 2026, but now it looks like the Fed will only cut them once in 2025, by 0.25%.

This means that the economy will likely stay tough for home buyers for the next few years.

How Will This Affect Home Buyers?

With higher mortgage rates and rising home prices, buying a home will still be difficult for many people.

If you’re thinking about buying a home, it’s important to be prepared for the higher rates and prices.

Before you start shopping, it may help to read our guide on choosing the best lender for a first-time home buyer.

Key Takeaways	Details
Mortgage Rates Staying High	Mortgage rates are expected to stay around 6.8% in 2025, higher than expected.
Why Rates Are High	Inflation and economic uncertainty are keeping rates high.
Federal Reserve’s Plans	The Fed is only expected to cut interest rates by 0.25% once in 2025.
Housing Market Challenges	With high rates and rising home prices, buying a home is still tough for many buyers.

What Can You Do?

If you’re planning to buy a home, it’s important to stay informed about mortgage rates and home prices.

Talk to a mortgage lender to see what rates you might qualify for, and make sure you’re financially ready for the higher costs.

You can also read our guide on how to make the home buying process easier so you know what to prepare before making an offer.

If you are ready to take the next step, you can get pre-approved for your dream home today.