The latest priority interest rate forecast from Fannie Mae is good, provided you are a potential home buyer or an existing homeowner.
The government-backed business (GSE) lowered its forecast fairly dramatically from a month earlier.
They now expect the 30-year-old fasting to be a full 30 basic points lower by the end of 2025. And 30 base points lower at the end of 2026.
Instead of a rate of 6.6% to close 2025, they now see the 30th year fall to 6.3% instead.
This should come as welcome news to anyone who wants to save some money on their priority loans.
Lower 10-year yields = lower priority-rate forecasts
Fannie Mae noted that the 10-year-old Treasury outcome has “withdrawn especially” from levels that were seen so recently as mid-January.
As such, they now expect the mortgage rates to be lower as a lower 10-year dividend means lower priority rates.
It coincided with Trump’s initiation. It seemed to be a sale of the news event, where he first entered the office warehouse fell and bonds began to collect.
Of course, this has been driven by a deteriorated financial view, so it can be bittersweet news.
In other words, you may hang a slightly lower interest rate, but your job security may be worse. Not exactly the best trade -off in the world.
Fannie Mae seems to primarily use the 10-year bond yield to come up with their monthly priority interest rate forecast.
And because it has fallen about 25 basic points, they have revised their rate views with a similar amount.
Instead of 6.6% by the end of 2025, they now expect a rate of 6.3%.
Their forecast for 2026 Rate also improved by 30 basic points (.30%) from 6.5%to 6.2%.
Fannie never gets too aggressive in their forecasts as they simply have rates that fall from 6.3% at the end of the year 2025 to 6.2% by 2026.
But I look more at the field than the actual numbers to get a sense of where the rates can go.
In other words, they could actually go much lower than Fannie expects to consider their conservative character. And if the 10-year dividend continues to fall, Fannie will continue to revise their expected lower.
Note that they revise these numbers every month, so their forecast is an ever-changing thing, not a one-off annual thing like my annual priority rate predictions.
What is interesting, however, is Fannie only projects a fat rate cut in September, followed by two more cuts in 2026.
Meanwhile, CME FedWatch still has odds on three efforts this year alone. Not that Fed controls the priority rates, but Fannie could play it safely here.
Still plenty of uncertainty about mortgage rates
To this end, they said, “There is an unusually high degree of uncertainty about the path of growth and inflation in the rest of 2025, which adds risk to our interest rate.”
I have repeated this mood recently because there is so much up in the air, whether it is DODE government, continuous trade war and global tariffs.
This makes it especially difficult to predict mortgage rates, especially when they are already difficult to predict to begin with in a normal environment.
When it comes to it, most priority interest rate forecasts get it wrong time and time again.
They were wrong when mortgage rates hit record low (they expected them to go up) and they were wrong when they hit 8% (they didn’t expect them to go so high).
So it’s never a good idea to put a lot of stock in these predictions.
However, the growing mood for lower priority rates later in the year appears to gather speed and could indicate that they will actually be lower.
In my 2025 forecast forecast, I said the 30-year-old fast would probably fall below 6% in the fourth quarter. Specifically, I said 5,875%.
I still think it will happen, though uncertaintyWhich appears to be the key word recently can make the rates jump around higher levels for a while.
And could keep them elevated for a long time, even if they eventually come down when the dust settles.
Ultimately, mortgage lenders and MBS investors do not want to be caught by surprise, so pricing will continue to be careful in the foreseeable future.
Remember, lenders are quick to raise the rates, but always take their sweet time to lower them.
However, thanks to this improved priority interest rate forecast, Fannie expects home purchase loan volume will rise 10% year-over-year in 2025 to $ 1.4 trillion (up $ 12 billion from last month’s prognosis).
They also expect the refinancing of loan volume to rise to $ 502 billion in 2025, a $ 38 billion boost from their February forecast.
Good news for both mortgage and home buyers and homeowners.
Read on: Should I wait for the mortgage rates to fall before I buy a home?
Before creating this site, I worked as a banking director of a wholesale loan in Los Angeles. My practical experience in the early 2000s inspired me to start writing about mortgage loans 19 years ago to help potential (and existing) home buyers better navigate the home loan process. Follow me on x for hot take.