Mortgage rates started the year slightly above 7% but are heading into the holiday season near the 6.2% level. Looking ahead to 2026, lenders and industry experts expect some relief, though not a dramatic shift.
On Monday, Mortgage News Daily reported that 30-year conventional fixed rates averaged 6.24%, down 2 basis points (bps) over the past week and 83 bps lower than at the end of 2024.
Meanwhile, HousingWire’s Mortgage Rates Center, which tracks locked loans across all credit profiles, showed that 30-year conventional loan rates averaged 6.37% on Tuesday, up 3 bps from a week ago. Rates for 30-year loans through the Federal Housing Administration (FHA) were flat at 6.11%, while rates for jumbo loans were down 3 bps to 6.22%.
The decline in rates in 2025 reflects a combination of Federal Reserve rate cuts, lower 10-year Treasury yields and a narrowing spread between those yields and the 30-year conventional mortgage rate — which are historically correlated due to their long-term horizons.
“It wasn’t that long ago that the 10-year Treasury was close to 5%; we stayed at 4.50% for a while and now we are in the 4.15% range,” said Joseph Panebianco, CEO of AnnieMac Home Mortgage. “Much of that reflected the market reducing its expectations for inflation, but there’s also something called the term premium — the additional compensation investors demand for long-term risk — and that has come down as well.”
Mortgage spreads also declined throughout the year, a development HousingWire Lead Analyst Logan Mohtashami has called the “hero” of the 2025 housing market. Unlike last year, spreads never approached the 3.60% level.
Dip in rates, spike in refis
At Atlantic Bay Mortgage Group, chief lending officer Emily Gardner said the company was able to take advantage of periodic rate dips throughout the year to close refinancing loans, with cash-out refinances proving particularly popular.
“Rates being generally lower this year, especially in the second half, helped our purchase business stay strong,” Gardner said. “Folks have realized that the interest rates aren’t going to be 3% anymore, and inventory has increased – 2025 has been a good year, and we are optimistic going in the next year.”
Gardner added that nonqualified mortgages gained traction through the broker channel in 2025, including debt-service-coverage ratio (DSCR) loans aimed at investors and second-home buyers.
According to Panebianco, another factor shaping rates in 2025 and beyond is competition among lenders. In recent years, some lenders slashed margins to gain market share, creating pricing pressure that pushed weaker competitors out of the market. That said, some lenders may temporarily offer more aggressive pricing on certain products, a dynamic that continues to play out on a daily basis, he added.
“We are at a stage in the game where the players that are left have the capital base to be able to withstand being around,” Panebianco said. “But most of those big players realized that it’s a short-lived experiment,” said Panebianco.
What’s next?
Looking ahead to 2026, industry experts expect the first half of the year to be relatively stable from a monetary policy standpoint, as Fed Chair Jerome Powell’s term ends on May 16. President Donald Trump is expected to announce a replacement in early 2026.
“We’re probably not going to see much movement in interest rates, one way or the other,” Panebianco said, noting that outlook could change if jobs or inflation data show sharp shifts. “I’m more bullish on lower mortgage rates in the second quarter than in the first half.”
About 87% of monetary policy watchers expect rates to remain unchanged at the Federal Reserve’s January meeting, according to the CME Group’s FedWatch tool — a forecast that held steady following the release of gross domestic product data on Tuesday.
Mortgage Bankers Association (MBA) Chief Economist Mike Fratantoni said that while “lingering effects of the government shutdown continue to impact key data,” inflation measures within the GDP report showed a pickup from the second quarter, with the core personal consumption expenditures (PCE) index rising to 2.9%.
“These data, along with the recently released employment and CPI metrics, show an economy that is growing, but unevenly, and one where inflation is still running well above the FOMC’s target,” Fratantoni said in a statement. “We forecast that the FOMC will be on hold at its January meeting, and will likely cut rates just once more next year.”
MBA forecasts mortgage rates will remain in a relatively narrow range over the next few years, between 6% and 6.5% — a scenario that becomes more likely as the Fed nears the end of its easing cycle. Fannie Mae’s November forecast projects mortgage rates at around 6%.