Mortgage Rate Predictions for 2026: When Will Mortgage Rates Go Down?
Mortgage rates rose steadily throughout July, and the Federal Reserve chose to leave the federal funds rate untouched at its July 28-29 meeting. Nonetheless, rates are a bit lower than they were a year ago, and now that we’re exiting peak homebuying season, buyers may find the market a little more amenable.
Affordability remains a real challenge for most buyers, however, as home prices and monthly payments remain high. The good news is that more houses are hitting the market and median home prices are on a slight downward trend, giving buyers more choices and slightly more negotiating power — even if the “perfect” combination of lower rates and lower prices still hasn’t arrived.
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The rate outlook
Expect rates to hover between 6% and 7%. Understand, though, that the sub-3% rates of the coronavirus pandemic era likely aren’t coming back.
Jump to: LendingTree’s rate forecast.
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For homebuyers
Buy now if you can afford the payments. Find the right home and plan to stay for at least five years.
Jump to: Should you buy a home this month?
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For refinancers
Refinance if your current rate is above 7.02%.
Hold off if your rate is below 6.66%.
Jump to: Should I refinance now?
Mortgage rates forecast for August 2026: Will interest rates continue to drop?
The short answer: Mortgage interest rates are expected to stay elevated in August — more than double the lows seen in 2021 — and remain above 6%.
Current mortgage rates for August 2026
are averaging:
6.70%
are averaging:
5.75%
What’s been happening with mortgage rates
National average mortgage rates rose slightly over the course of June and July, in part a reflection of rising inflation. LendingTree’s expert doesn’t anticipate that rates will manage to drop below 6% by the end of August.
Fannie Mae agrees, predicting average 30-year fixed-rate mortgages will hover at approximately 6.4% for the rest of the year, according to its latest housing forecast.
“No one should expect rates below 6% anytime soon,” says Matt Schulz, LendingTree’s chief consumer finance analyst. “If inflation remains stubbornly high, it could make it even harder for rates to move lower and provide much-needed relief to the housing market.”
It’s near-certain that mortgage rates will remain high compared to the levels seen during the height of the COVID-19 pandemic, when average 30-year mortgage rates were around 2.65%. Those record lows, as nice as they were, might not ever be seen again in our lifetimes.
Rates have fallen by over half a point since last January, and that’s a big deal. For example, on a $500,000 home with a 30-year mortgage at 7% with a 10% down payment, you’d pay $3,895 per month. Drop that rate to 6.5% and your payment falls to $3,745. That’s a difference of $150 per month, which can be really significant to the average American family on a tight budget.
Should I buy a house now or wait?
Buying may make sense if:
- You can comfortably afford the monthly payment.
- You expect to stay in the home for at least five years.
- You have the flexibility to refinance if rates decline.
Even if rates ease later this year, home prices and competition may increase at the same time, which can offset the benefit of waiting. offset the benefit of waiting. ease later this year, home prices and competition may increase at the same time, which can offset the benefit of waiting.
Home affordability in August 2026
Home affordability may improve slightly this month, but not dramatically. Minor rate drops may help some buyers, but elevated rates and high home prices mean affordability remains tough for most Americans.
The median monthly payment was $2,191 in June 2026, according to the Mortgage Bankers Association’s purchase applications payment index.
Mortgage rates aren’t the only thing affecting affordability. Inventory, home prices and seasonal buying trends all influence how expensive it is to purchase a home. That’s why we combine all four into a single affordability grade.
How are these grades calculated? Jump to our affordability grades section to find out.
The Federal Reserve declined to cut rates at its most recent meeting, but many market experts — including Schulz — see rate hikes on the horizon, as inflation remains high.
But even if the Fed does cut or raise the federal funds rate, mortgage rates won’t necessarily follow in lockstep. Here’s what you need to know:
- Rate cuts and hikes affect adjustable-rate mortgages (ARMs) directly, but fixed-rate mortgages indirectly.
- Falling mortgage rates can spark rising home prices. If rates do fall, whether the balance will tip toward increased affordability or a troublingly hot housing market remains to be seen.
- Rising mortgage rates are often associated with slower home price growth.
- The Fed may adopt a more aggressive strategy this year than it did in 2025, in part because a new chairperson took over this spring.
The bottom line for buyers
Don’t wait for perfect conditions. Focus on what you can afford now, shop with multiple lenders for the best rate, and take advantage of early-in-the-season pricing benefits if you’re ready to buy. Schulz urges homebuyers to negotiate their mortgage rates and fees, and notes that we’ve now entered a buyer’s market.
Should you refinance in August 2026?
For most homeowners, refinancing only makes sense if you’re saving at least 0.50% on your interest rate and plan to stay in the home long enough to recoup closing costs.
Because rate declines are expected to be gradual, there may not be a clear “best” time to refinance. Instead of trying to time the market, it’s more effective to calculate your break-even point and determine whether refinancing now makes sense for your timeline.
Expert advice on when to refinance
It’s typically smart to hold off on a refinance until you can qualify for a rate that’s at least 50 basis points
Does refinancing make sense for you now?
| Your current rate | Recommendation | Notes |
|---|---|---|
| 7.16% to 7.41% or higher | Refinance now | You could save significantly by refinancing. This is the sweet spot where the rate difference (at least 50 basis points) makes refinancing worthwhile despite closing costs. |
| 6.67% to 7.15% | Compare offers, but expect modest gains | You’re in the same range as current refinance rates. You might save $50 to $100/month, depending on your loan size, but closing costs could take several years to recoup. |
| Below 6.66% | Wait | You already have an excellent rate. Refinancing now would likely increase your rate, not lower it. |
Current refinance rates for August 2026
30-year Refinance Rates
are averaging:
7.02%
15-year Refinance Rates
are averaging:
6.44%
Special circumstances in which you should consider a refinance
Even if your rate is lower than 6.66%, refinancing might make sense in these situations:
- Converting an ARM to a fixed-rate loan. If you have an adjustable-rate mortgage that’s about to reset or you want payment stability, refinancing to a fixed rate locks in predictability even if the rate is slightly higher than your current ARM.
- Cash-out refinance. Need funds for home improvements, debt consolidation or other major expenses? A cash-out refinance lets you tap your home equity. Just ensure the new interest rate and payment still fit your budget.
- Shortening your loan term. Moving from a 30-year to a 15-year mortgage means higher monthly payments but significantly less interest over the life of the loan.
- Financial emergency. If you’re facing financial hardship and even modest savings would make a real difference in your monthly budget, don’t wait for perfect conditions. Act on the savings you can achieve now.
How we calculate our affordability grades
Think of this like a report card for the housing market. We grade four factors — rates, prices, inventory and seasonal timing — then combine them to provide a snapshot of overall housing affordability. The better the grade, the easier it is to afford a home right now.
- A: 3.48% or less (Excellent)
- B: 3.49% to 3.89% (Good)
- C: 3.90% to 4.52% (Fair)
- D: 4.53% to 6.58% (Expensive)
- F: 6.59% and above (Very expensive)
Data source: Freddie Mac Primary Mortgage Market Survey®
- A: 0.07% or lower (Excellent/large decrease)
- B: 0.79% to 0.08% (Good/slight decrease)
- C: 1.99% to 0.80% (Fair)
- D: 3.01% to 2.00% (Expensive)
- F: 3.02% or higher (Very expensive)
Data source: S&P Cotality Case-Shiller U.S. National Home Price Index, via the Federal Reserve Bank of St. Louis
- A: 1,211,611 or higher (Excellent, balanced)
- B: 1,044,928 to 1,211,610 (Good, improving)
- C: 794,751 to 1,044,927 (Fair, modest improvement)
- D: 613,524 to 794,750 (Poor, declining)
- F: 613,523 or less (Declining sharply)
- A: January and February
- B: March, September, November and December
- C: April, July, August and October
- D: May and June
- F: Unforeseen or extreme events
Data source: LendingTree analysis: “The $23,000 Secret: January Is the Cheapest Month to Buy a Home”
For each factor we assessed, we then assigned a point value to the grade:
- A = 4.0 points
- B = 3.0 points
- C = 2.0 points
- D = 1.0 points
- F = 0.0 points
Then, we weigh the sub-scores to arrive at a final grade, since all factors aren’t equally important:
| Category | Weight | Rationale |
|---|---|---|
| Mortgage rates | 35% | Rates have the biggest impact on your monthly payment and long-term costs. |
| Home prices | 35% | Home prices directly determine affordability and how much income you’ll need to bring to the table. |
| Housing inventory | 20% | Inventory affects your options when shopping, and can affect your ability to negotiate in the homebuying process, but doesn't radically change baseline affordability. |
| Seasonal timing | 10% | Seasonality has a minor effect on prices and can change from year to year. |
We then give the final score a grade:
- 3.26 to 4.00 = A
- 2.51 to 3.25 = B
- 1.51 to 2.50 = C
- 0.76 to 1.50 = D
- 0 to 0.75 = F
Frequently asked questions
In today’s market, any rate below 6.66% is better than the national average. That said, your best rate is unique to you, your financial profile and the exact mortgage type you want to borrow. Use LendingTree to find your best offer — when banks compete, you win.
Mortgage rates are unlikely to go down to 5% in 2026. And, due to high inflation and other economic factors, LendingTree’s experts don’t predict rates will drop below the 6% threshold any time soon, either.
It’s impossible to say for certain, but our market experts aren’t expecting rates anywhere near 3% for the foreseeable future. In general, experts seem to agree that rates will hover between 6% and 7% for most of the next few years.
You can expect to pay around $3,242 per month for a $400,000 mortgage loan near today’s average rates with a 30-year repayment term. Of course, the exact amount will change depending on your financial profile and the market conditions when you take out your loan.
In the summer of 2025, buying an existing home was more expensive than building a new one for the first time since 1989, according to the National Association of Home Builders. The trend had reversed itself by the end of the year, however, and new builds were once again more expensive per square foot than existing homes.
There is some evidence that buyers of newly constructed homes get more opportunities to reduce costs, both through builder incentives and mortgage rate buydowns.
Explore whether it’s better to rent or buy in today’s market.
“There’s no reason to think that the housing market is going to crash anytime soon,” Schulz says. Low unemployment and foreclosure rates, as well as a moderate housing inventory increase, are all signs that the housing market is relatively healthy, he adds.
And, if you’re thinking a housing market crash could even bring some benefits — like lower home prices — he offers this reminder: “These things don’t happen in a vacuum. A housing market crash very well might be accompanied by a recession, for example. That would likely mean increased unemployment and greater overall economic uncertainty, leaving people even less able to afford to buy.”
A mortgage interest rate is the base rate you’re charged to borrow money, but a mortgage annual percentage rate (APR) is the total cost of taking out a mortgage (the interest rate plus closing costs and fees). Both numbers are expressed as a percentage. For more details, check out our guide to distinguishing an APR versus an interest rate.
Mortgage rates dropped to a historic low of 2.65% in January 2021, when the Federal Reserve cut the federal funds rate to 0% to stabilize the post-pandemic economy.
Haggle for a lower interest rate by using your mortgage offers as leverage. Ask each lender about matching your lowest quoted rate. Consider making a larger down payment, select an ARM loan with a lower initial rate or ask your lender about your mortgage buydown options.
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