Fannie Mae economists now expect mortgage rates to stay much higher than previously anticipated from late 2026 through 2027.
The latest projection puts the average rate on a 30-year fixed mortgage at 7.4% in the fourth quarter of this year and at 7.5% on average across all of 2027.
Those figures mark a sharp upward revision from the earlier estimates of 6.8% for the fourth quarter and 6.7% for the whole of 2027.
Data from the mortgage information website Mortgage News Daily showed the average 30-year fixed rate at 7.46% on Tuesday, with rates likely to climb further today.
Hotter-than-expected inflation readings have pushed U.S. Treasury yields higher.
Against a backdrop of stubbornly elevated inflation and a bond market selloff driven by multiple factors, mortgage rates have risen steeply since the start of September.
The Federal Reserve also raised its benchmark rate for the first time in more than three years.
Mortgage rates do not move in lockstep with the Fed's policy rate, but they do respond to the central bank's assessment of future inflation.
Home loan rates broadly track the yield on the 10-year U.S. Treasury note.
That yield has jumped recently on rising oil prices and mounting concerns about global economic risks.
Higher rates have already pushed the housing market into a deep slump this autumn.
Zillow data showed that pending sales of existing homes fell 8.5% in September from a year earlier.
Faced with high home prices and steadily worsening affordability, buyer demand has shriveled.
Not only can fewer buyers afford a home, but fewer of those who can are able to qualify for a mortgage.
Fannie Mae did not respond to a request for comment on the updated forecast.
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