Each month, the government-sponsored enterprise (GSE) Fannie Mae releases a housing market forecast.
This includes projections of how various aspects of the real estate market will perform throughout 2026 and 2027, including new housing starts, home sales, and — the big one for many homebuyers — mortgage rates.
So far, mortgage rates have been much higher in 2026 than people expected.
The week of Aug. 13, the average 30-year fixed mortgage rate was 6.67%, according to Freddie Mac. As of Aug. 19, the Mortgage News Daily 30-year rate was 6.72%.
We’re all hoping for lower rates sooner rather than later. But looking at the Fannie Mae August Housing Forecast, things don’t look good.
Fannie Mae’s mortgage rate forecast spikes
Mortgage rates were calmer than they are now at the beginning of 2026.
The Freddie Mac 30-year mortgage rate ended 2025 at 6.15%. In the Fannie Mae January Housing Forecast, the GSE predicted that the 30-year rate would average 6% in 2026 and in 2027.
But once the United States and Israel attacked Iran at the end of February, mortgage rates increased. They may have inched down occasionally, but overall, they haven’t fully recovered.
As the war in Iran has trudged on, Fannie Mae has predicted higher mortgage rates for longer.
In its June and July Housing Forecasts, Fannie Mae projected that the 30-year rate would average 6.3% in both 2026 and 2027.
Related: Morgan Stanley’s troubling housing forecast is playing out now
As you might expect, the GSE raised its predictions again in August. But the hike was much more noteworthy this time.
In July, Fannie Mae had predicted a 6.4% mortgage rate in Q3 and Q4 2026. Then, it expected the rate to decline to 6.3% over three quarters and end 2027 at 6.2%.
In its August forecast, the GSE projected the 30-year interest rate to average 6.7% in Q3 and 6.8% in Q4 2026. Next, it predicted a 6.8% rate in the first half of 2027 and 6.7% in the second half.
Altogether, Fannie Mae put the average 30-year rate at 6.5% for 2026 and 6.7% for 2027.
For several months, the organization’s interest rate projections ticked up here and there, or were higher in a couple of quarters but not others. This is the most drastic shift upward Fannie Mae has given us all year.
Why the sharp increase in mortgage rate predictions?
It’s worth noting that even though the Fannie Mae Housing Forecast is published mid-month, its mortgage rate predictions are based on rates from the last day of the previous month. So its August outlook relies on July 31 interest-rate data.
The timing doesn’t seem to make much of a difference in August, though.
On July 30, the Freddie Mac mortgage rate was 6.66%. When the August forecast was released, Freddie Mac’s rate had actually inched up to 6.67%.
The Mortgage News Daily rate was 6.83% on July 31. It’s inched up and down over the last couple of weeks, sitting at 6.69% on Aug. 13, the day the Fannie Mae forecast was published. (It’s since bounced back up to 6.72%.)
So, there haven’t been any huge rate shifts since July 31 that give me serious pause about Fannie Mae’s numbers.
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You may be surprised that Fannie Mae’s rate forecast has increased so sharply. After all, we’ve received some good news from recent inflation and employment reports, and it’s looking less likely that the Federal Reserve will hike the federal funds rate at its September meeting.
“Expectations for a September Fed hike have fallen to roughly one in three, but longer-term rates may remain in a holding pattern until investors see more evidence of a slower-growth, slower-inflation economy,” loanDepot Chief Investment Officer and Head Economist Jeff DerGurahian said in a note shared with TheStreet.
There is simply too much economic and geopolitical uncertainty to confidently predict that mortgage rates will decrease. And this might be the case until the U.S. makes significant strides toward peace with Iran.
Mortgage rate predictions: Fannie Mae vs. MBA vs. Wells Fargo
Fannie Mae’s mortgage rate predictions aren’t the be-all and end-all. A couple of other large organizations also update their rate projections monthly.
The Mortgage Bankers Association (MBA) is a tad more optimistic than Fannie Mae — but it doesn’t expect home loan rates to move much.
In the July MBA Mortgage Finance Forecast, the MBA predicts that the average 30-year fixed mortgage rate will hold at 6.5% through 2026, 2027, and even 2028. The MBA uses Freddie Mac rate data to craft its outlooks.
Numbers-wise, Wells Fargo’s outlook is actually the most hopeful of the three.
Wells Fargo puts the average 30-year fixed rate at 6.55% in Q3 and 6.4% in Q4 2026, according to the bank’s August U.S. Economic Forecast. It expects the interest rate to drop to 6.35% in Q1 2027, then hold at 6.3% for the rest of the year.
Regardless of whether Fannie Mae, the MBA, or Wells Fargo’s projections are most accurate, the overall message is clear: Don’t expect mortgage rates to fall under 6% in 2026 or 2027.
