Fannie Mae’s October outlook points to elevated financing costs for U.S. borrowers, putting the average 30-year fixed mortgage rate at 7.5% in 2027 as the Mortgage Bankers Association (MBA) also sees the 30-year rate above 7%.
Fannie Mae’s Oct. 12 forecast sets the rate at 7.5% in each quarter of 2027, compared with a 6.7% annual average in its September outlook. It projects an average of 7.4% in the fourth quarter of 2026. The October forecast used rate inputs available as of Sept. 30.
The MBA expects the 30-year rate to average 7.3% in the final quarter of 2026 and remain above 7% through 2027. It projects single-family mortgage originations will fall 5% to just under $2 trillion next year, from $2.1 trillion expected in 2026.
The latest weekly reading edged lower. Freddie Mac reported a 7.32% average for 30-year fixed mortgages in the week ended Oct. 22, down from 7.40% a week earlier. Its average for 15-year fixed mortgages was 6.68%.
Mike Fratantoni, the MBA’s chief economist, cited inflation, central-bank rate increases, budget deficits and debt as forces pushing up longer-term rates. The association projects the 10-year Treasury yield will average 5.1% in the fourth quarter of 2026 and stay near 5% through 2027. On Aug. 3, the U.S. Treasury estimated it would borrow $628 billion in privately held net marketable debt during the October-December 2026 quarter, assuming an end-of-December cash balance of $850 billion.
Cotality Chief Economist Selma Hepp told CNBC that investment in AI data centers, power generation and related infrastructure is increasing competition for capital. Fannie Mae’s and the MBA’s forecast releases do not quantify an AI-specific effect on mortgage rates.
The outlook extends EconoTimes’ earlier coverage of loanDepot’s forecast for rates near 7% through year-end.
August data from the Bureau of Economic Analysis (BEA) showed the Personal Consumption Expenditures price index rose 3.4% from a year earlier, while the measure excluding food and energy increased 3%. Both readings were above the Federal Reserve’s 2% longer-run inflation goal. The BEA is scheduled to release September figures Oct. 29 at 8:30 a.m. EDT.
