Will mortgage rates drop below 5% in 2026 or 2027?

It isn't likely based on current forecasts. Fannie Mae, the MBA, and Wells Fargo all project rates staying in the mid-6% range through 2027, well above the 5% level many buyers are hoping for.

Why do rates feel so high right now?

Rates in the mid-6% range are actually close to the long-term historical average, which is around 7.8% since 1971. They feel high mainly because pandemic-era rates in the high 2% and low 3% range were unusually low, not the norm.

What's an adjustable-rate mortgage, and is it a good option?

An ARM starts with a lower rate than a 30-year fixed loan, then adjusts after an initial period. It can make sense for buyers who don't plan to stay in the home long-term, but it carries more risk if you stay longer than planned.

What is a mortgage rate buydown?

A buydown is when you or the seller pay upfront to lower your interest rate, either for the life of the loan or for the first few years. It's a way to lower your monthly payment now instead of waiting for market rates to fall.

Can I take over the seller's existing mortgage rate?

In some cases, yes, through an assumable mortgage. This mostly applies to certain FHA, VA, and USDA loans, and it can be a real advantage if the seller locked in a lower rate than what's available today.

Blog > Why Mortgage Rates Won't Drop Much on the MS Gulf Coast Soon

Why Mortgage Rates Won't Drop Much on the MS Gulf Coast Soon

by Randy Richardson

Quick Answer: If you're waiting for mortgage rates to drop a lot before buying on the Mississippi Gulf Coast, you may be waiting longer than you think. Fannie Mae, the Mortgage Bankers Association, and Wells Fargo all expect 30-year rates to stay in the mid-6% range through 2026 and into 2027. Inflation is still running above the Fed's target, which is one of the biggest reasons rates aren't expected to fall much. The good news is you don't have to wait to move, since there are other ways to improve your monthly payment right now.

Rates Aren't Expected to Fall in a Meaningful Way

If you're holding out for rates to drop, you're not alone. A survey from Clever Real Estate and Best Interest Financial found that 42% of prospective buyers believe mortgage rates will fall below 5% this year. The experts who track rates for a living see it differently. Fannie Mae's latest forecast puts the 30-year rate at 6.5% for 2026 and 6.7% for 2027. The Mortgage Bankers Association expects rates to hold around 6.5% through 2026, 2027, and even 2028. Wells Fargo is the most optimistic of the three, projecting rates easing from about 6.55% this quarter to 6.3% by the second half of 2027.

None of those forecasts get anywhere near 5%. Rates can always surprise everyone, but if you're planning around a big drop, the people who study this for a living aren't expecting one anytime soon.

Inflation Is Still Working Against Lower Rates

Mortgage rates and inflation move together, and high inflation generally means rates stay higher for longer. The most recent reading puts annual inflation at 3.4%, edging down slightly after running higher earlier this year. That's an improvement, but it's still well above the Federal Reserve's 2% target. Until inflation gets closer to that target and stays there, one of the key ingredients for a meaningful rate drop simply isn't in place.

Today's Rates Aren't High, They're Normal

Here's the mindset shift that helps most. Today's rates may feel high compared to a few years ago, but by historical standards, they're not. The 30-year fixed rate has averaged around 7.8% going back to 1971, according to Freddie Mac. Rates in the mid-6% range are well within the normal historical band. It feels high mostly because so many people remember the ultra-low rates from the pandemic years, which were the exception, not the rule.

What You Can Do Instead of Waiting

Why Mortgage Rates Won't Drop Much on the MS Gulf Coast Soon

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