Mortgage Rate Predictions For The Next 5 Years, According To An Economist

Mortgage rates have been a hot topic over the last several years. After plunging to historical lows in 2021, they rose sharply as the Federal Reserve began steadily raising interest rates in an effort to combat some of the causes of inflation. While 30-year fixed mortgage rates have fluctuated somewhat over the last few years, they have remained stubbornly high — hovering around 6% to 7% — since 2023. The question on many minds these days is: where are rates headed next? According to Michael Wolf, a global economist at Deloitte Touche Tohmatsu Ltd., rates will likely continue their current trend of gradually heading downward over the next few years. However, if you're a house hunter or looking to refinance, don't expect a dramatic drop.

"The 30-year fixed mortgage rate has moved lower, falling just below 6.7% on September 2, down from 7% in May," Wolf said. Despite the recent drop, however, he says mortgage rates are "still quite high given current rates of inflation and economic growth." This elevated level, he believes, is likely to persist. While factors such as economic growth, inflation, and how aggressive the Fed is with rate cuts, will all influence mortgage trends Wolf expects only a modest decline in mortgage rates over the next five years.

While rates are expected to trend downward, the move is expected to be slow and steady — and unlikely to dip below 6%. After ending 2025 at 6.75% — consistent with where they've been the previous two years — Deloitte anticipates rates to fall modestly to 6.61% in 2026. The decline is likely to be a bit more significant in 2027, falling to 6.14%, and by 2028, the firm expects rates to drop to 6.02%, where they are expected to remain steady through 2030. 

Keep in mind, there are always economic forces at work that could impact where rates ultimately end up. Mortgage rates typically move in tandem with 10-year treasury yields, so any developments that significantly weaken the economy — such as a recession — could force 10-year treasury yields lower and bring mortgage rates down with it. Major changes in the Fed's monetary policy, or even Trump's policies, could lead to more steep rate cuts or even a reverse course that could ultimately alter the rate outlook. Barring any major economic shockwaves, however, it appears unlikely that rates will drop meaningfully in the foreseeable future. So, if you've been holding out hope that rates would fall back to the sub-3% levels seen five years ago, it's probably time to let go of that dream.