Mortgage Rates Will Remain Above 7% Through 2027, Top Economist Forecasts

Mortgage rates will remain elevated above 7% through the end of next year, according to the forecast of a top housing economist with the Mortgage Bankers Association."Inflation is too high, leading central banks to raise short-term rates, while budget deficits and debt are unsustainably high, leading bond investors to push up longer-term rates,” MBA Chief Economist Mike Fratantoni said at the group's annual conference on Sunday in Chicago.Fratantoni expects that the 30-year mortgage rate will average 7.3% in the fourth quarter of 2026 and remain above 7% through 2027, driven by elevated Treasury yields and more restrictive central bank policies.As of last week, mortgage rates averaged 7.40%, a three-year high, according to Freddie Mac. Rates have climbed sharply since late February, as the global oil shock from President Donald Trump's war with Iran ripples through the economy, forcing the Federal Reserve to take action on resurgent inflation.Last month, the Fed hiked its benchmark interest rate for the first time in three years. Fratantoni says he expects two additional quarter-point Fed hikes, one in December of this year and the second in the first quarter of 2027. That would ta...