Fannie Mae Projects Lower Rates In 2025 And 2026

Fannie Mae’s Economic and Strategic Research (ESR) Group has revised its mortgage rate projections downward, now expecting rates to end 2025 at 6.3% and 2026 at 6.2% — each lowered by three-tenths of a percentage point. According to the group's March 2025 commentary, this adjustment has led to a slight upward revision in its outlook for existing home sales in 2025, though overall home sales expectations remain muted.

Meanwhile, the ESR Group has also made modest downward revisions to its real gross domestic product (GDP) forecast, now projecting growth of 1.7% in 2025 and 2.1% in 2026. These adjustments reflect weaker incoming data and a clearer picture of trade policy developments.

"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."