Buyers growing accustomed to new rate reality, broker suggests
Mortgage rates might still be too high for many borrowers’ tastes – but they aren’t set to surge by the end of the year, according to Fannie Mae, and will likely have ticked slightly lower by December.
Hopes for a steep decline in rates this year have failed to materialize, with the 30-year fixed average still hovering above 6.70% and keeping some homebuyers sidelined as they wait for borrowing costs to fall.
Fannie Mae’s latest economic and housing outlook, released Wednesday, showed that the government-sponsored enterprise (GSE) now expects rates to finish this year little changed, at 6.4%, and to hit 6% by the end of 2026.
That marks only a tiny adjustment from its earlier forecast, which had called for rates to end 2025 at 6.5% and fall to 6.1% at the end of next year. But home price growth is now set to come in much lower than originally expected across the US, Fannie indicated: prices are forecast to climb by 2.8% year over year in the fourth quarter of 2025, compared with an initially projected 4.1%.
Some borrowers might view a higher-for-longer rate environment with dismay – but there are signs that most are slowly becoming accustomed to the current rate outlook, according to Lendid Home Loans president Trey Bolen (pictured top).
He told Mortgage Professional America that the days of record-low rates seen during the COVID-19 pandemic were fading into memory, and that buyers are now used to the reality of higher mortgage costs.
“I think we’re far enough past the low rates where most people understand that we’re not getting to those rates again,” Bolen said. “And I don’t have many conversations where people are thinking that there’s a realistic possibility in the near term – or even very long term [of lower rates]. Those were once-in-a-lifetime rates, so we’re kind of past that period.”
Existing home sales in the U.S. fell in June as home prices reached another all-time high, creating a challenging environment for hesitant buyers.https://t.co/JCARJUAhdi
— Mortgage Professional America Magazine (@MPAMagazineUS) July 23, 2025
COVID rates just aren’t coming back
Many homeowners who purchased during the pandemic secured ultra-low mortgages that they may be unwilling to give up, keeping them in their property instead of reentering the market.
But for buyers who want to get their foot in the door, Bolen said hopes of a big rates dip in the near future have faded rapidly.
Instead, he said most are coming to terms with the current rate environment being a “new normal” and accept that they’ll be waiting a long time if they try to hold out for big rate drops.
“It’s been long enough since rates have increased, so luckily that’s no longer an inhibitor for buyers to get into the market,” he said.
“There are some that are still waiting for rates to come down some more, but some of those could be for good reasons – because they’re just literally priced out at the moment. But most people aren’t waiting around for rates to get back into the threes. We’re not having that conversation anymore.”
Expectations for sales, originations revised upwards
While rates aren’t plummeting anytime soon, Fannie’s latest forecast has some good news for mortgage brokers. It’s upped expectations for home sales across the country this year, and now sees 4.85 million homes changing hands – compared with its prior forecast of 4.82 million.
For next year, it’s adjusted its home sales projection to 5.35 million, up from 5.25 million, and also sees mortgage originations ticking higher.
This year will see total originations jump to $1.92 trillion, compared with its prior forecast of $1.90 trillion – and 2026 is set for even bigger improvement, to $2.34 trillion (compared with a previous prediction of $2.28 trillion).
For now, the steady rate environment – with no sudden swoops or spikes – is welcome news for buyers who prefer a stable market, according to Bolen. “It’s been five-plus years since we’ve seen a normal market,” he said. “Even a lot of real estate agents and loan officers don’t remember, or weren’t around in business, for a normal market.
“It’s just about better education with people: your home’s not going to sell in a weekend. A normal market is for your home to sit for 60 days and for there to be some occasional price cuts. So it’s back to a normal, healthy market.”
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