Mortgage Rate Forecast: Why Rates Are Expected to Stay Above 6% Until 2028

According to a leading industry forecast, prospective homebuyers should prepare for 30-year fixed mortgage rates to remain above 6% for the foreseeable future. This outlook, extending through 2028, suggests a significant shift from the ultra-low rate environment of the previous decade. Based on assessments from the Mortgage Bankers Association (MBA), this persistent elevation is primarily driven by sustained government deficits and ongoing inflationary pressures, creating a new financial reality for the housing market.

What Is the Current Mortgage Rate Forecast?

The chief economist at the Mortgage Bankers Association (MBA), Mike Fratantoni, has presented a clear projection: 30-year fixed mortgage rates are anticipated to hover in the range of 6% to 6.5% through 2028. This forecast indicates that the era of historically low sub-3% rates is firmly in the past. The prediction is based on current economic data and models that account for major fiscal pressures. For context, a 30-year fixed mortgage is a home loan with an interest rate that remains constant for the entire 30-year term, providing payment stability for homeowners.

Why Are Mortgage Rates Expected to Stay Elevated?

Two primary factors are preventing a significant drop in mortgage rates: government deficits and inflation concerns. Large federal budget deficits increase the government's borrowing needs, which can push up interest rates across the economy, including for mortgages. Simultaneously, the Federal Reserve's continued focus on tamping down inflation means that monetary policy is unlikely to become highly accommodative in the near term. When inflation is high, lenders demand higher interest rates to compensate for the decreased purchasing power of future loan repayments.

What Does This Mean for Homebuyers?

For those planning to purchase a home, this forecast necessitates a recalibration of expectations and budgets. Higher mortgage rates directly increase monthly housing payments, reducing purchasing power. For example, the difference in a monthly payment on a $400,000 loan at 3% versus 6.5% is substantial.

This highlights the importance of getting a personalized mortgage rate quote and basing your home search on a comfortable monthly payment rather than a maximum loan amount.

How Can Buyers Navigate a Higher-Rate Environment?

While a return to 3% rates is not anticipated soon, buyers have strategies to manage these conditions. Focusing on improving your credit score can help you qualify for the best available rate from lenders. Additionally, considering mortgage points—fees paid to the lender at closing in exchange for a reduced interest rate—could make sense for those who plan to stay in their home long-term. Exploring different loan types, such as an Adjustable-Rate Mortgage (ARM), may also be an option for some, though this introduces the risk of future rate increases.

The key takeaway is that affordability is the central challenge. Based on our assessment, potential buyers should focus on financial preparation, including saving for a larger down payment to reduce the loan amount and subsequent monthly costs. Getting pre-approved by a lender is a critical first step to understand your true budget in this new rate climate.