Fannie Mae Revises Rate Outlook

Home buyers who are waiting for loan rates to drop to 6% before jumping back into the market will get their wish. But they’ll likely have to continue chomping at the bit until sometime late next year.

Fannie Mae’s Economic and Strategic Research Group predicts rates will eventually dip to 5.9% by the end of 2026. Six percent is considered by many to be the rate that will awaken the market from its current doldrums.

In its September outlook, the ESR Group forecasts that rates will be at 6.4% by the end of 2025. Loan costs have been falling slowly for several weeks, now resting at 6.55%, according to most observers.

In a previous forecast, it said rates will decline to just 6.1% by year-end 2026.

Fannie Mae’s economists are now calling for $1.85 trillion in originations this year before bouncing back up to $2.32 trillion next year. As rates continue to drift lower, the refinance share of loan volume will reach 26% this year and 35% next year.

In numerical terms, refinancing will account for $810 billion in volume in 2026, roughly double what they will end up being this year.
Home sales, meanwhile, are expected to total 4.72 million in 2025 and 5.16 in ‘26, the group said. New home starts will continue to falter, though, dipping to 1.345 million next year.

Save for 2026 originations, those projections indicate a slowing sales market next year. Previously, Fannie Mae said 4.74 million sales would be recorded in 2025 sales and 5.23 million would be registered in 2026.

On the other hand, originations were previously expected to hit $2.26 trillion in ‘26. Now, the forecast is for $2.32 trillion.