MBA Warns Mortgage Rates will Stay Elevated

What’s going on with mortgage rates?

According to the MBA’s economists, mortgage rates aren’t heading down any time soon, and many of the long-hopes for a dip below 6% may need to be re-thought.

Why rates may stay elevated

At the conference in Las Vegas, MBA Chief Economist Mike Fratantoni flagged a number of headwinds:

• Long-term government bond yields (the 10-year Treasury) are still hovering in the 4 – 4.5 % range, which tends to keep mortgage rates elevated.
  

• Inflation is creeping back up, and further tariffs are expected to raise the federal deficit significantly — all of which tends to push rates higher.
  

• The data aren’t showing signs of a rate drop yet: although many in the market expected rates to slide below the 6 % mark next year, that simply “is not showing up in the data yet” Fratantoni said.
  

In short: the economic conditions aren’t lining up for lower interest rates any time soon.

What the MBA projects for the housing side

It’s not all doom and gloom — there are some encouraging signs in the broader housing market, according to the MBA’s deputy chief economist Joel Kan. Here are some of the key take-aways:

• Purchase mortgage applications have increased 15–20 % over the past six months.
  

• The typical principal & interest payment has dropped— meaning the payment burden has eased a bit.
  

• That said, other housing costs continue to rise steeply: since 2019, homeowners insurance is up 69%, property taxes up 27%.
  

• On home values and supply: inventory has begun to increase, which should ease price growth, and the MBA expects national home prices to decline for several more quarters.
  

So while rates may not be falling, the underlying housing market is showing signs of life.

What this means if you’re looking to buy or refinance

For buyers:

• You should budget assuming that rates will stay above 6 % for the near term. 

• But on the bright side, with inventory improving and price growth softening, you may have more options and a little more negotiating room.

• Don’t overlook the rising costs beyond the loan payment itself: higher insurance and property taxes continue to chip away at affordability.

For refinance candidates:

• If you’re hoping for a refinancing wave triggered by falling rates, you may need to reassess the timing. The MBA is skeptical of a sizeable rate cut anytime soon.

• While rates may not move much lower, other factors like loan terms, switching to an adjustable-rate mortgage, or lowering payment burden can still be relevant. The MBA noted that borrowers increasingly are opting for ARMs to ease monthly cost.
  

Key take-aways

• The MBA’s outlook: We’re not likely to see a significant dip in mortgage rates anytime soon — the headwinds are real and holding back downward movement.

• Even so, the housing market is showing resilience: higher purchase activity, easing payment pressures, and better supply dynamics.

• If you’re in the market: plan with realistic rate assumptions, but also leverage any improvements in housing conditions to your advantage.