Mortgage Rates Could Dip Below 6% in 2026—But the Window May Be Brief

Mortgage rates are finally coming down, but some forecasts suggest the window for lower borrowing costs could be brief.

According to Freddie Mac, the average rate on a 30-year fixed mortgage was 6.06% for the week ending January 15. That nearly one–percentage-point decline from this time last year (the January 2025 average was 6.97%) can make a substantial difference, saving a buyer of a $450,000 home with a 20% down payment nearly $220 per month and nearly $78,000 over the life of a 30-year loan.

Many forecasters still expect mortgage rates to hover in the lower 6% range through 2026. But a handful of outlooks stand out: They see rates dipping into high- or even mid-5% territory—potentially around midyear—before climbing back up, as economic conditions shift and housing demand begins to recover.

These Forecasts See Mortgage Rates Dipping Below 6% in 2026

Morgan Stanley strategists believe 30-year fixed mortgage rates could temporarily dip to between 5.50% and 5.75% around the middle of 2026, before moving higher again.

Curinos, a mortgage analytics firm, sees a similar pattern, though its outlook puts the low point slightly higher, at about 5.8%. Curinos expects that dip to be short-lived. In its quarterly forecast, mortgage rates fall in the second quarter before edging back up in the second half of the year.

Curinos isn’t alone. LendingTree’s Matt Schulz floated a similar forecast, while Bankrate’s Ted Rossman and MBS Highway’s Barry Habib each said that mortgage rates could fall as far as 5.5% in 2026, similar to Morgan Stanley’s forecast.

Until recently, Fannie Mae also projected rates would fall to 5.9% by year-end before revising its outlook slightly higher. Jen Poniatowski, senior vice president of mortgage growth and market development at Key Mortgage Services, likewise sees room for rates to briefly move into the 5% range.

Why Mortgage Rates Could Fall Below 6% This Year

A slowing economy and cooling inflation could push mortgage rates lower later this year, even if the Federal Reserve moves cautiously on rate cuts.

Morgan Stanley points to investor behavior as a key driver. As growth slows and uncertainty rises, investors often move money into safe-haven assets like U.S. Treasurys. That demand can push down the 10-year Treasury yield—which mortgage rates tend to track—potentially bringing it to around 3.75% by mid-2026 and lowering borrowing costs in the process.

Curinos also sees the economy softening and notes that mortgage rates have often hit their lows around midyear. “If I evaluate the last two years, Q2 and Q3 is when we have tended to see the lows for rates,” said Richard Martin, Senior Vice President of Retail Lending at Curinos. “I expect that trend to continue into this year.”

Martin said big contributors this time around could be a weaker labor market and persistent inflation. “Both of these would have downward pressure on rates and more likely have the Fed considering more than just one or two projected cuts,” he said.

Beyond market mechanics, Martin argues that a dip below 6% may be necessary to restart housing activity. Housing drives consumer spending, construction, and job growth across a wide range of industries, but activity has been muted as many homeowners remain locked into lower rates.

“With 80% of first-lien mortgage holders with rates less than 6%, we almost have to see rates dip below 6% to support a growing mortgage market this year,” Martin said. “If we don’t achieve that, we could see further stagnation, which the Fed or the administration may view as a headwind for the broader economy—and potentially respond with additional fiscal or monetary support.”

Why Some Experts See Rates Inching Back Up After the Dip

Even forecasters who expect mortgage rates to move below 6% don’t think the decline will last. By the end of 2026, most expect borrowing costs to be back around where they started the year, near 6%.

That outlook reflects expectations of a temporary economic slowdown rather than a deep recession. As rates fall, housing demand and broader economic activity are expected to pick up, reducing demand for safe-haven bonds and gradually pushing Treasury yields—and mortgage rates—higher again.

Poniatowski expects rates to fluctuate throughout the year, potentially ranging from about 5.75% to 6.6%. For rates to stay below 6% for long, she said, there would need to be sustained progress on inflation.

“Inflation progress needs to hold,” Poniatowski said. “Sustained rates in the 5s require confidence that inflation is cooling without re-accelerating. Any upside surprise in inflation tends to push mortgage pricing higher, quickly.”

How Buyers and Homeowners Should Think About These Forecasts

Forecasts that mortgage rates could dip later this year may tempt some buyers or homeowners to wait for a better deal. But financial planners caution that trying to time the market based on rate predictions can be risky.

Lawrence Sprung, a certified financial planner, says focusing too narrowly on rate forecasts can distract from what matters most when buying or refinancing a home.

“Waiting for rates to potentially go down and then higher and picking the ideal time would be akin to catching a falling knife,” Sprung said. “Rates are fluid, and you need to be prepared should they move in any direction when looking to purchase a home.”

Ultimately, Sprung advises against relying on predictions. “Even when the Fed lowers rates, which they have done several times over the past year … we have seen rates for mortgages remain stable, decline and even increase.”