Mortgage rates are expected to remain above 6% in 2026
If you’re waiting for withholding tax rates to drop visibly, don’t hold your breath.
Rates on the 30-year bond are expected to remain above 6% for at least the next two years, according to the next asset management association, or MBA, a forecast revealed at the group’s annual conference earlier this week.
According to their daily mortgage loan survey, the 30-year fixed rate is 6.3% as of Thursday. And despite the long-awaited short-term interest rate cut by the Federal Reserve last month, MBA doesn’t expect prices to fall flat in the long run.
Mike Fratantoni, an MBA senior economist, highlighted the silver linings at the conference.
“While foreclosure rates are not expected to decrease further,” he said, “the supply of housing has increased in recent months, which will moderate home price growth.”
In September, the average sale price of a home dropped to $363,000, while the mortgage payment (takes the down payment of the property and does not include taxes or insurance) and was cleared by $1,812, the lowest point this year, according to Zillow data.
Interest rates are a sticking point for many Americans. The MBA’s predictions are the latest in a series of reports showing traders and retailers should be relieved of withholding tax rates of around 6%. A recent analysis by Redfin found that nearly 1 in 1 homeowners own 6% or more, and the real estate firm expects rates to remain above that level over the next 12 months.
The September forecast by Fannie Mae, the government-sponsored pink group, was more optimistic, hoping that interest rates could fall to 5.9% by the end of 2026.
Laurie Goodman, founder of the Urban Institute’s Housing Center, previously told the money that expects the housing market to “remain muted” until prices are 5.8% or lower.
“Remember, there are many lenders out there with very low rates,” she said. And many are not ready to give them until now.
Why are corporate tax rates still so high?
Following a 3% extension during the pandemic, withholding tax rates broke the 6% threshold in September 2022 and have not looked back.
Rising inflation has a lot to do with that, but with inflation hovering around 3% and the Fed starting to cut interest rates again, many are wondering why mortgage rates are staying above 6%.
The simple answer is: The FED does not directly control withholding tax rates.
In fact, when the Fed made its first rate cut last month, interest rates actually fell short. That’s because interest rates closely track the yield on the 10-year Treasury note, which is priced at long-term rates.
According to Wealth Management Firm Financial Group JMG, the main reasons why long-term interest rates are expected to remain low include long-term inflation expectations and the growing Federal Deficit.
For home owners, unfortunately that means the days of buying 3% cash are gone. Revenue Rate Data going back to the 1970s suggest that it was light living, and that rates above 6% were the norm.
More from money:
8 of the best mortgage lenders of 2025
How I bought a home with zero down payment and scored 4.75%
Adding a ‘Preceplory’ Home to your property? Ask these 7 questions first
