Trade group’s new outlook points to a choppy but slowly thawing market
The Mortgage Bankers Association’s latest Economic and Mortgage Finance Forecast points to a housing market that continues to normalize rather than snap back, with mortgage rates expected to hover in a tight band above 6% and home prices flattening at the national level.
In its December outlook, MBA projects that 30‑year mortgage rates would hold in a narrow 6–6.5% range over the next several years as the Federal Reserve nears the end of its cutting cycle in 2026.
That path, the group suggests, would underpin a gradual recovery in purchase activity rather than a sudden refinancing boom.
MBA outlook: slow growth, not a surge
MBA also anticipates modest softening in the labor market, with the unemployment rate rising from 4.6% today to around 4.7% in the first half of 2026, alongside elevated budget deficits and debt that are expected to keep the 10‑year Treasury yield above 4%.
Mike Fratantoni, MBA chief economist, has already signaled that dynamic, saying “our forecast is for mortgage rates to stay within a fairly narrow range over the next few years,” noting that most housing economists do not expect a move back to sub‑6% borrowing costs.
On the housing side, MBA’s forecast points to growing inventory in many markets, helping to support more purchase activity as buyers see a wider set of options and home price growth cools, including outright price declines in a rising number of metros.
Nationally, the group expects price growth to slow to roughly 1% by late 2025 before dipping slightly into negative territory in late 2026, reflecting higher supply and weaker demand.
“An increase in housing supply, combined with cooling rates, [was] going to open the door for homebuyers in more markets,” Fratantoni told Mortgage Professional America, adding that “in more and more markets around the country, it's going to be a buyer's market as opposed to a seller's market that it’s been for a number of years.”
Refis stay muted as purchase lending drives volume
MBA projects total single‑family originations of $2.05 trillion in 2025 and $2.2 trillion in 2026, with purchase loans rising from $1.36 trillion to $1.46 trillion as existing‑home sales improves on the back of gradually expanding for‑sale inventory and slightly better affordability.
Refinance volume, by contrast, is expected to edge up from $694 billion to $737 billion, driven by brief windows of rate‑driven activity rather than a broad‑based wave.
Home price expectations also converged. Fannie Mae recently cut its home sales forecast and projects home price gains of just 1.3% in 2026, a sharp deceleration from recent years as affordability constraints and softer demand took hold.
The next year is unlikely to deliver a rate‑driven rescue. Instead, business growth would depend on winning a larger share of a slowly expanding purchase market, competing aggressively on service and execution as the balance of power shifts unevenly back toward buyers.
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