The Mortgage Bankers Association (MBA) projects that 30-year fixed mortgage rates will remain roughly between 6% and 6.5% through the end of 2028, a prospect that would keep affordability pressures in place for prospective buyers. The MBA’s outlook, presented at the group’s annual conference, reflects expectations that long-term rates will be held up by fiscal pressures and inflation expectations even as short-term policy rates are trimmed modestly. The economists forecast two short-term rate cuts in 2025 and one in the following year, but they expect those moves will not be enough to push long yields and mortgage rates materially lower. As such, the 10-year Treasury yield is expected to stay above 4% under this scenario.
Mortgage rates have already averaged about 6.27% recently, and the MBA view is notably less optimistic than some other forecasts that foresee a fall below 6% in coming months. Still, the MBA anticipates some episodic easing that could spur limited refinance activity when rates dip briefly.
Any Silver Linings?
Despite the dour interest-rate outlook, the MBA expects a modest increase in overall housing activity, projecting the total home sales to rise to just above 5 million next year from a projected 4.8 million in 2025. That improvement is expected to come largely from an increase in inventory, which the MBA says should ease home-price growth and expand options for buyers. Nationally, the MBA economists predict home prices will fall for several quarters before returning to modest annual growth in late 2027.
Regional conditions will vary. The MBA notes price declines already occurring in many Sun Belt markets, including parts of Florida, Colorado, and Arizona, while limited supply is keeping prices elevated in several Northeastern and Midwestern states such as New York, Connecticut, Illinois, and New Jersey. These diverging trends mean local housing affordability and sales activity will be increasingly market-specific.
Affordability remains strained. The MBA reports the typical mortgage payment at about $2,067, which is only slightly lower than recent peaks but still much higher than levels from five years ago. To manage higher payments, the MBA says borrowers have been shifting more toward adjustable-rate mortgages and FHA loans. The analysts also highlight that rising property taxes and homeowners insurance add further cost pressure for both buyers and current owners.
Taken together, the MBA outlook suggests limited near-term relief for households hoping for lower, sustained mortgage rates. Inventory gains may cool prices in some areas, but elevated borrowing costs and additional ownership expenses will keep affordability a key challenge for the foreseeable future.
