The 2026 rate forecast.

The honest disclaimer

Every published forecast you see — Fannie Mae, MBA, NAR, Bankrate, Redfin — has been wrong by enough to matter in at least one of the last five years. Use forecasts as scenarios, not predictions. The job is to plan a decision that survives any of the plausible outcomes.

What drives the 30-year fixed

The 30-year mortgage rate ≈ 10-year Treasury yield + MBS spread. Both move:

• 10-year Treasury. Driven by Fed expectations, inflation, and Treasury supply (the federal deficit). When the market expects more rate cuts, the 10-year falls.
• MBS spread. The premium investors demand to hold mortgages over Treasuries. Widens during volatility and when prepayment risk rises (e.g. when rates are dropping fast and homeowners are about to refinance).

Consensus view for 2026

Most major forecasters (Fannie, MBA, NAR) currently see the 30-year fixed in the 6.0–7.0% range through most of 2026, gently sloping down. Their thesis:

• Fed continues a cautious cutting cycle as inflation drifts toward 2%
• 10-year Treasury settles in the 3.75–4.25% band
• MBS spreads tighten back toward historical norms (~150 bps over 10-year, vs. recent 200+)

Contrarian scenarios

Higher-for-longer

If inflation reaccelerates (tariffs, energy shocks, wage pressure), the Fed pauses or hikes. The 10-year stays elevated. 30-year mortgage 7–8% through 2026.

Recession scenario

If labor markets crack, the Fed cuts aggressively and the 10-year drops to 3% or below. 30-year mortgage 5.5–6% by late 2026. This is good for buyers — but only if they still have jobs and confidence.

Treasury supply shock

If the federal deficit drives a surge in Treasury issuance without enough buyers, the 10-year rises even as the Fed cuts. Mortgages stay stuck even though short rates fall. This is the "bear steepener" scenario.

What it means for San Diego decisions

Buyers

If you can afford the payment at today's rate, buy. You can refinance the rate, you can't refinance the price — and San Diego inventory is structurally limited. Waiting for "lower rates" historically costs more in price appreciation than it saves in payment. See our refi guide for how the math actually works after the fact.

Refinancers

If you can drop your rate by ~0.75%+ and stay in the loan past breakeven, refinance now. Trying to time the absolute bottom usually costs you a year of higher payments while you wait for the dip that may not come.

Sellers

Lower rates mean more buyer demand. If consensus is right and rates drift toward 6%, expect San Diego inventory to thin further as sellers come off the sidelines selectively while buyer pools expand. Net: still a tight market.

Where rates have been