If Fannie Mae is right, house hunters who wait to pull the trigger on a new home until later this year may be rewarded with lower mortgage rates. But waiting until 2026 may not provide much additional relief.
That’s the upshot of a housing report released Friday by Fannie Mae, a government-sponsored enterprise that buys mortgages to ensure ongoing financing availability for homebuyers. The report forecasts that the average rate on a 30-year loan will fall from 6.8% in the first quarter of this year to 6.3% by year-end.
“We think mortgage rates will move even lower within the next quarter and ultimately close the year at approximately 6.3 percent, which could be low enough to generate some extra sales from any would-be buyers still waiting on the sidelines,” said Mark Palim, Fannie Mae Senior Vice President and Chief Economist, in a press release.
But after that, Fannie Mae’s analysts predict rates will flatten out in 2026, perhaps sliding only a tenth of a point further to 6.2%.
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The Impact of a Half-Point Mortgage Rate Reduction
So, how much do you stand to save if you can lock in a mortgage rate that’s a half percentage point lower than rates today? It depends of course on the size of your loan. But even for a modest mortgage size of $200,000, a half-point rate savings could keep $66 per month in your pocket. That may not sound like a lot, but it’s almost $800 every year.
Bigger loans will have larger monthly payments, but see more significant savings, as you can see below. For a $400,000 loan, the reduction per month could be $132, for an annual savings of more than $1,500.
| Monthly Mortgage Payment Savings from a Half-Point Rate Reduction | ||||
|---|---|---|---|---|
| Loan amount | Monthly payment at 6.80% | Monthly payment at 6.30% | Savings per month | Savings per year |
| $200,000 | $1,304 | $1,238 | $66 | $791 |
| $300,000 | $1,956 | $1,857 | $99 | $1,186 |
| $400,000 | $2,608 | $2,476 | $132 | $1,582 |
| $500,000 | $3,260 | $3,095 | $165 | $1,977 |
| $600,000 | $3,912 | $3,714 | $198 | $2,373 |
| $700,000 | $4,563 | $4,333 | $231 | $2,768 |
| $800,000 | $5,215 | $4,952 | $264 | $3,163 |
Today’s Mortgage Rate News
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The national and state averages cited above are provided as is via the Zillow Mortgage API, assuming a loan-to-value (LTV) ratio of 80% (i.e., a down payment of at least 20%) and an applicant credit score in the 680–739 range. The resulting rates represent what borrowers should expect when receiving quotes from lenders based on their qualifications, which may vary from advertised teaser rates. © Zillow, Inc., 2025. Use is subject to the Zillow Terms of Use.