Mortgage rates ended February near their lowest levels since 2022. But can rates keep falling? That seems unlikely, mortgage experts say.
The Federal Reserve is not expected to cut its benchmark rate at its March meeting, reflecting a mostly healthy economy. While the central bank doesn’t control mortgage rates directly, it does set the tone. Meanwhile, housing economists see little on the horizon that would push mortgage rates down.
“There is downward momentum in mortgage rates, but a catalyst for a significant step lower has not yet materialized,” says Stephen Kates, Bankrate’s financial analyst. “Without direct intervention from the Federal Reserve or the federal government, mortgage rates are more likely to drift gradually lower as inflation risks and economic uncertainty continue to ease. Buyers and refinancers should be on the lookout for sub-6% rates over the next few months.”
Most housing economists say it’s unlikely rates will fall much farther. Fannie Mae predicts rates will hover around 6% for the rest of 2026 and into 2027.
But mortgage rates are nothing if not volatile, and other factors could push them higher.
“Wildcards like new tariffs, private-sector layoffs, changes in Federal Reserve leadership and potential international conflict could cast a shadow over the sunny lower-rate environment,” says Lisa Sturtevant, chief economist at Bright MLS.
The median national home price clocked in at $396,800 in January, a record high for the month, according to the National Association of Realtors. “March is when the spring homebuying season typically begins to ramp up, and with rates at a three-and-a-half year low, it could be a barn burner of a spring homebuying season,” Sturtevant says.
Bankrate’s weekly mortgage rate averages differ slightly from the statistics reported by Freddie Mac, the government-sponsored enterprise that buys mortgages and packages them as securities. Bankrate’s rates tend to be higher because they include origination points and other costs, while Freddie Mac removes those figures and reports them separately. However, both Bankrate and Freddie Mac report similar overall trends in mortgage rates.
Limited spots available
We’re building something new to make rate shopping smarter and simpler. Join our waitlist to get early access, share your feedback, and unlock exclusive offers.
You’re all set! We’re gearing up to share something big. You’ll hear from us soon with what’s next.
Improve your credit score. The lowest mortgage rates go to borrowers with the highest credit scores, usually at least 780. A lower credit score won’t prevent you from getting a loan, but it can make all the difference between getting the best possible rate and more costly borrowing terms.
Save up for a bigger down payment. Putting more money down upfront can help you obtain a lower mortgage rate, and if you put down at least 20% of the purchase price, you’ll avoid mortgage insurance, which adds costs to your loan. If you’re a first-time homebuyer and can’t cover a 20% down payment, there are loans, grants and programs that can help. The eligibility requirements vary by program but are often based on factors like your income.
Understand your debt-to-income ratio. Your DTI ratio compares how much money you owe to how much money you make, specifically your total monthly debt payments against your gross monthly income. Not sure how to figure out your DTI ratio? Bankrate has a calculator for that.
How are mortgage rates determined?
Mortgage rates are not directly set by any one entity; they grow from a complicated mix of economic factors. Lenders typically set their rates based on the return they need to make a profit after accounting for risks and costs. The Federal Reserve gets a lot of attention, but it doesn’t directly set mortgage rates, either. The closest proxy for mortgage rates is the 10-year Treasury yield: Historically, the typical 30-year mortgage rate has been about 2 percentage points higher than the 10-year Treasury yield. But since the pandemic, that “spread” has been closer to 3 percentage points.
When should I refinance my mortgage?
Deciding when to refinance is based on many factors. If rates have fallen since you took out your mortgage, refinancing might make sense. A refi can also be a good idea if you’ve improved your credit score and could lock in a lower rate. A cash-out refinance can accomplish that as well, plus give you the funds to pay for a home renovation or other expenses.
