Predicting what mortgage rates will do has become more difficult than ever for the mortgage experts. This year has shown that rates can change faster than the weather. With the 30-year fixed rate almost up a full percent since the February lows of 6%, crossing our fingers will most likely will not help us see rates in the 5% range in 2026.
Many “expert” mortgage forecasters tend to agree that we will not see 5% range in the near future unless there is a shift in geopolitical conflicts. Some think if the war in Iran ends, there’s a chance rates could return to the 6% range like we saw in February. The longer the war goes on, the longer inflation will last, the government defense costs will rise, meaning bond yields will stay higher (currently 4.58% vs 3.96% the end of February) making mortgage rates remain at higher levels than had hoped for 2026. Typically, in the past year the 10-year yields have been staying about 2% less than the 30-year fixed home loan rate. Until the war is over it will be difficult to assess what mortgage rates will do. A global recession may be needed which would require quantitative easing (QE last done in March 2020 at the start of COVID-19 pandemic which the fed bought trillions in Treasury securities and mortgage-backed securities through early 2022) by the Fed before we would see a return of mortgage rates in the 5% range in the next few years. A long, drawn-out war could lead into this global recession.
Like timing the stock market, timing mortgage rates for those wanting to jump in the housing market is risky but also pretty impossible based on our current economy and global conflicts. If you are looking to buy a home, finding the right home at the right price that will fit in your budget is what you should focus on. A person may be able to refinance to lower rate down the road, but they may also want to compare a 30-year fixed rate to an Adjustable-Rate Mortgage (ARM) depending on their financial situation and based on the length of time they are planning on staying in a home. Waiting for the “perfect” rate may be more costly in the long run as there is no guarantee rates will not go higher in the near future but also home prices may continue to rise causing buyers to lose out on building their net worth for the future.
By: Troy Arenz – Mortgage Consultant