Both Fannie Mae and the Mortgage Bankers Association pushed down their respective mortgage finance forecasts for 2026 as rates continued their climb in September.
Much of this movement started even before indicators became strong that the Federal Open Market Committee would need to boost short-term rates, which it did on Sept. 16.
While Keefe, Bruyette & Woods' latest forecast calls for a 6.5% 30-year fixed rate mortgage based on a 4.75% 10-year Treasury by year-end, the two outlooks are similar on rate movements for the next six quarters (including this one), and call for 6.8% by year-end.
Fannie Mae has rates at 6.7% for all of 2027; the MBA differs just in the first two quarters, calling for 6.8%.
Compared to
The MBA's projections were all baked in, to account for the Fed announcement and recent movements in the Treasuries, Joel Kan, deputy chief economist, said in an emailed statement.
Most of Friday the 10-year Treasury was at 5%, the fourth day this week the yield was around this level.
Fannie Mae put out its forecast on Sept. 15, while the MBA's is dated Sept. 16.
For 2026, MBA's September forecast calls for a total of $2.123 trillion, with $1.423 trillion of this coming from purchase. A month ago, the total of $2.147 trillion included $1.434 trillion of purchase and $713 billion of refinance. It expects $2.101 trillion in 2027 and $2.16 trillion the following year. August's outlook for those years are $2.144 trillion and $2.184 trillion.
Fannie Mae is pretty close to MBA in this year's prediction of $2.121 trillion; it sees $1.426 trillion of purchase volume. This is
The government-sponsored enterprise going forward only has put out a 2027 forecast; September's edition called for $2.278 trillion, down from August's $2.294 trillion.
BTIG analyst Douglas Harter commented on the Fannie Mae forecast in the Mortgage Finance Weekly report on Sept. 18, pointing out 30-year FRMs
"In our opinion this introduces further downside risk to the forecasts next month," Harter wrote.
BTIG's forecast, which cites MBA and Fannie Mae as inputs as well as its own data, calls for $1.42 trillion of purchase and $700 billion of refi activity this year. Next year, it expects $1.492 trillion and $670 billion, while for 2028 BTIG predicts $1.566 trillion and $750 billion respectively. This was unchanged from last week.
Another reduction was in existing home sales. The MBA now forecasts approximately 4.105 million home sales on a seasonally adjusted annual rate; for August it projected 4.183 million.
Fannie Mae now calls for 4.062 million in 2026, down from 4.106 million.
"Demographics by themselves suggest it's really hard to see the number of existing home sales fall below 4 million," said Doug Duncan,
It is the fourth consecutive year of
From the perspective of one non-qualified mortgage originator, the rate environment is much different today than even 60 days ago.
"So the question is really from there, where can you go?" Duncan asked. "And both of the forecasts are pretty much saying, well, nowhere this year, we're going to be pretty much where we were last year."
Going forward, a lot depends on what happens with inflation next year. Part of what has been pushing rates up is a strong underlying U.S. economy.
"To the extent that the Fed feels they're going to have to continue to tighten, it's not anytime soon that we're likely to see mortgage rates come down," Duncan said.
I think if rates stay where they are, it's a challenging road ahead for all of us," said Gurp Bhandal, the founder of RateSecure, a California-based lender which serves high net worth clients.
But any rate environment has winners, especially because consumers are still transacting.
"That's where the opportunity comes; we're in a space where rate is a factor, but that's not the only factor, Bhandal said. "That's not the driving force behind the decision our client makes."
