Will Mortgage Rates Go Down in 2026?What Minnesota Families Need to Know

If you're thinking about buying a home in 2026, chances are you've asked the same question almost everyone else is asking:

"Will mortgage rates go down?"

It's a reasonable question. Interest rates affect affordability, monthly payments, and how comfortable you feel making a move.

But after more than 20 years in real estate, I've learned that the families who build the most wealth aren't usually the ones who perfectly time the market.

They're the ones who make thoughtful, strategic decisions based on their goals, their timeline, and their overall financial picture.

Let's look at what's influencing mortgage rates today—and more importantly, how to think about your next move wisely, regardless of where rates go.

Why Are Mortgage Rates Still Relatively High?

Many buyers remember the historically low mortgage rates of 2020 and 2021 and wonder why rates remain elevated today. The reality is that mortgage rates are influenced by inflation, economic growth, government debt markets, and investor confidence—not just housing demand.
Real-world example:
Throughout 2024 and 2025, inflation cooled significantly compared to peak levels seen in 2022. Yet mortgage rates did not fall as quickly as many economists expected because bond market investors remained cautious about inflation and federal spending. This demonstrates why mortgage rates don't always move in lockstep with inflation headlines.  

For many buyers, that creates a feeling of uncertainty:

"Should we wait?"

"What if rates drop after we buy?"

"What if we buy now and regret it?"

These are exactly the kinds of questions I help clients work through every day.

The good news is that a successful real estate decision is rarely determined by a single interest rate. It's determined by having a clear strategy.

The Fed Doesn't Set Mortgage Rates—But It Influences Them

One of the biggest drivers of mortgage rate conversations is the Federal Reserve.

While the Fed doesn't directly set mortgage rates, its decisions regarding short-term interest rates influence borrowing costs throughout the economy.

When inflation is elevated, the Fed often keeps rates higher to help slow spending and stabilize prices. When inflation cools, the Fed may begin lowering rates. Investors pay close attention to these signals, which is why mortgage rates often move even before the Fed takes action.

There have been periods when the Federal Reserve lowered short-term rates, yet mortgage rates remained relatively unchanged because investors were concerned about future inflation. Buyers who were waiting for an immediate rate drop discovered that mortgage markets don't always respond the way headlines suggest.

For Example: The Cost of Waiting Isn't Always Lower

Many families postpone a move hoping for lower rates. Sometimes that strategy works. Other times, rising home prices or missed opportunities offset any savings from a lower interest rate.

They're waiting for mortgage rates to drop before making a move. Meanwhile:

• Their family continues to feel cramped.
• Home prices continue to appreciate.
• Their growing equity remains underutilized.
• Another year passes in a home that no longer serves their lifestyle.

Could rates eventually come down? Absolutely.

But sometimes waiting for the perfect rate costs more than moving forward with the right plan.

That's why I encourage clients to evaluate the entire picture—not just one number.

Will Mortgage Rates Drop in 2026?

No one can predict mortgage rates with certainty.

You'll find forecasts from respected organizations that point in slightly different directions because economic conditions can change quickly. Many financial and housing experts expect rates to gradually decline or stabilize throughout 2026. Most forecasts place the average 30-year fixed mortgage rate somewhere between the mid-5% and low-6% range. 

Mortgage Bankers Association

The Mortgage Bankers Association expects rates to gradually moderate as inflation continues to stabilize and economic conditions evolve.
A gradual decline may improve affordability, but dramatic drops are considered less likely by many analysts.  

National Association of Realtors

The National Association of Realtors has generally projected a more favorable borrowing environment as the market continues to normalize and encourage more homeowners to list their properties.
Many homeowners currently hold mortgages below 4%. If rates decline, some may finally feel comfortable selling, increasing available inventory for buyers.  

Goldman Sachs

Goldman Sachs economists have suggested that easing inflation and slower economic growth could create conditions for lower borrowing costs over time.
Rate improvements may occur gradually rather than through a sudden market shift.  

Freddie Mac

In its most recent forecast, Freddie Mac predicted that the 30-year fixed-rate mortgage will average 6.4% in 2023, with a lower average of 6.2% in the fourth quarter. The financial company cited the job market, moves from the Fed, and the decelerating housing market.
Historically, mortgage markets tend to move in cycles. Rather than dropping quickly, rates often adjust slowly over several quarters.

Morgan Stanley

In its U.S. housing market outlook forecast, Morgan Stanley predicts that 30-year fixed mortgage rates will average 6.2% in 2023. In a best-case scenario, the investment bank writes that mortgage rates could fall below 6%, but that would require the Fed to successfully tame inflation sooner than expected (Lambert, 2022).

Economic data released throughout the year can influence mortgage rates even more than housing market activity itself.

Bankrate

According to Bankrate, the average 30-year fixed mortgage rate is around 6.55%, and many housing experts expect rates to remain in the mid-to-upper 6% range throughout 2026.

What this means for buyers:

While many people are waiting for rates to drop, most forecasts aren't predicting a dramatic decline. That's why it's important to focus on your overall strategy—not just the interest rate.

The best real estate decisions aren't about perfectly timing the market. They're about making a move that supports your family's lifestyle and long-term financial goals.

What Strategic Buyers Are Doing Right Now

Rather than trying to predict the exact direction of mortgage rates, many successful families focus on what they can control:

• Understanding how much equity they have available today.
• Exploring creative financing options.
• Building a coordinated buy-and-sell strategy.
• Evaluating neighborhoods that support their long-term goals.
• Planning for both today's needs and tomorrow's opportunities.

Real-world example:
Some homeowners are using their existing equity to move into homes that better fit their family's lifestyle today while positioning themselves to refinance later if rates decline.

They aren't waiting for perfect conditions. They're making thoughtful decisions based on a clear strategy.

Final thoughts

While experts have different opinions about where mortgage rates will go in 2026, most agree that rates are likely to remain relatively stable, with gradual changes rather than dramatic drops.

If you've been waiting for the "perfect" time to buy or sell, remember that real estate success isn't about perfectly timing the market. It's about having a strategy that aligns with your family's goals, lifestyle, and long-term financial future.

The most successful buyers focus on what they can control—understanding their options, strengthening their financial position, and creating a plan that works in today's market while supporting their future goals.

Because the best real estate decisions aren't driven by headlines. They're driven by clarity, confidence, and a strategy designed for the life you want to build.