Fannie Mae raises 2027 mortgage rate forecast
The agency now expects mortgage rates to average 7.5% next year, up from its September forecast of 6.7%, while lowering its projections for home sales.
Fannie Mae raised its mortgage rate forecast for 2027, projecting borrowing costs will remain higher than previously estimated and home sales will recover more slowly.
In its October housing forecast, released last week, Fannie Mae's Economic and Strategic Research Group projected that 30-year fixed mortgage rates will average 7.5% in 2027. That's up from the 6.7% projected in its September outlook.
The revised forecast calls for rates to remain at 7.5% throughout all four quarters of 2027. It also anticipates weaker home sales and slower price growth than previously expected.
A closer look at the numbers
Fannie Mae's latest projections show several changes to its 2027 housing outlook:
- Nationlwide existing-home sales are expected to reach 4.06 million, down from the previous forecast of 4.22 million.
- Total home sales, including new construction, are projected at 4.71 million, compared with 4.88 million in September.
- National home price growth is expected to slow to 0.6%, down from the earlier projection of 1%.
- Mortgage refinancing volume is projected at $430 billion, compared with $802 billion previously.
The revised outlook follows a recent rise in mortgage rates. This week, the average 30-year fixed mortgage rate held steady at 7.40%, ending seven consecutive weekly increases while remaining at its highest level since November 2023.
Other housing economists also anticipate elevated rates. Mortgage Bankers Association Chief Economist Mike Fratantoni told Realtor.com that persistent inflation and federal debt concerns are contributing to higher borrowing costs.
"Inflation is too high," Fratantoni said, pointing to pressure on both short- and long-term interest rates.
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