No one really knows where mortgage rates go from here, but all the experts are making their best guesses — and they are guessing lower rates.
Whether you are buying or selling, all eyes are on interest rates as the Federal Reserve in September cut rates by .25 percent, the first time since 2024.
What does that mean for the housing market?
As expected, the people with the crystal balls are making a variety of predictions. All the experts think mortgage rates will dip next year, but they are divided on how much.
Mortgage giant Fannie Mae is the most optimistic, projecting that rates will fall below the magic 6 percent by the end of 2026. Some observers, such as the National Association of Realtors, think if rates hit 6 percent there is a potential for double digit home sales growth as housing becomes more affordable.
Other observers are not so sure. The Mortgage Bankers Association thinks mortgage rates will dip slightly but remain at 6.5 percent and mortgage loan corporation Freddie Mac thinks rates will land between 6.2 and 6.4 percent.
A 6 percent rate environment means buyers will find mortgages more affordable and sellers may find their properties sell more quickly.
But, there will still be some seller hesitation. According to the Federal Housing Finance Agency, more than 80 percent of mortgages have a rate below 6 percent. Some sellers will still be unwilling to give up their low interest rates.
Rates have already been trending down with a 30-year fixed rate averaging 6.26 percent in September, an 11 month low, according to Freddie Mac.
Of course, all predictions are that rates will drop by the end of 2026 and that is a long wait. If you need to sell or buy, you can still make your best deal now. Buy a house you can afford and don't wait for a future that might not materialize. Similarly, sell when you need to do it. There are plenty of buyers who can and will make a deal.