Mortgage Rates Are Expected to Stay Above 7% Through 2027. Now What?
Good news, everyone: mortgage rates are scary, and it's October, so at least they're on theme.
The less fun news is that the people whose entire job is forecasting rates don't think it's a costume. The Mortgage Bankers Association (MBA, the national trade group for the mortgage industry) just put out its latest forecast, and it expects the average 30-year mortgage rate to stay above 7% through the end of 2027.
For context, Freddie Mac's weekly average sat at 7.40% for two straight weeks as of October 15. That's the highest it's been in three years.
So if your plan was to wait it out until rates drop back into the 5s, I'm going to gently suggest you get comfortable. Maybe buy a nice chair.
Below is what the experts are actually saying, what buyers here in Jacksonville are doing about it, and a short list of questions to ask lenders. And yes, you should call more than one lender. I'll get to that.
What the Experts Expect for Mortgage Rates
MBA Chief Economist Mike Fratantoni shared the forecast at the group's annual conference in Chicago on October 11. The short version:
- An average 30-year rate of about 7.3% from October through December 2026
- Rates staying above 7% through the end of 2027
On how much relief to expect, Fratantoni said, "We're going to come down from this spike in rates. The unfortunate news is, I don't think we're going to come down that far."
Not exactly a motivational poster, but I appreciate the honesty.
The main culprit is inflation. It's running well above the Federal Reserve's 2% target, and higher energy prices aren't helping. To fight it, the Fed raised its key interest rate last month for the first time in three years, and MBA expects two more small increases: one in December 2026 and one in the first quarter of 2027.
Mortgage rates tend to follow the 10-year Treasury yield, which is what investors earn on 10-year government bonds. Lenders use it as a guide when setting rates. MBA expects it to average around 5.1% this quarter and hover near 5% through 2027. Translation: don't hold your breath.
How Buyers Are Dealing With 7% Rates
The buyers who are still out there shopping aren't just gritting their teeth. MBA Deputy Chief Economist Joel Kan says more of them are using one of two tools to get their rate down: adjustable-rate mortgages (ARMs) and paying points. ARMs made up almost 10% of applications over the past month, and MBA expects that share to stay above 9% through 2027.
Here's how each one works:
- Adjustable-rate mortgage (ARM): You get a lower rate for a set number of years. After that, the rate can go up or down, so your payment could climb. Sometimes by a lot.
- Mortgage points: You pay an upfront fee at closing to buy your rate down. That lower rate sticks for the life of the loan, but you'll need more cash at the closing table.
Which one makes sense depends on how long you plan to stay in the home and how much cash you want to bring to closing. A good lender can run both scenarios side by side for you in about ten minutes.
What This Means If You're Waiting to Buy
If MBA is right, waiting for rates to fall well below 7% could mean waiting until 2028 or later. A few other things from the forecast worth knowing:
- Home purchase activity nationally is running about 9% below where it was in January.
- National home price growth has been in the 2% range. MBA expects it to slow in 2027 and pick back up in 2028.
- MBA expects builders to start fewer new homes over the forecast period.
Here at home, the September numbers from the Northeast Florida Association of REALTORS® tell a similar story. In Duval County, the median single-family sale price was $345,000, with 830 closed sales and about 3.8 months of inventory on the market. In St. Johns County, the median was $568,750 with about 3.7 months of supply. Across the six-county region, homes went under contract in a median of 36 days.
What that looks like on the ground: there are more homes to choose from than there were a couple of years ago, buyers have room to negotiate, and prices haven't fallen off a cliff just because rates went up. If you're a buyer who can handle today's payment, you're shopping with less competition than the people who decide to wait for a "better" rate and then all show up at once.
Questions to Ask When You Call Lenders
Rates and fees vary from one lender to the next, sometimes more than you'd think. That's why I tell every buyer to talk with more than one. Bring these questions to each call:
- How much would it cost to buy points, and how many years until the lower payment pays that back?
- If I go with an ARM, how long does the starting rate last, and how high could my payment go after that?
- What rate and APR can you give me on a 30-year fixed right now?
- What fees are included in your Loan Estimate?
- How long can I lock my rate, and what happens if rates move before closing?
Ask each lender for a Loan Estimate. It's a standard form that spells out your rate and closing costs, so you can lay them side by side and compare apples to apples instead of vibes to vibes.
If you're not sure who to call first, I've got a short list of local lenders I trust, based on my own experience and on what my clients have told me after working with them. Just ask.
The Bottom Line
Based on MBA's forecast, rates above 7% are likely sticking around for at least another year. Getting your loan questions answered early gives you a real budget before you start touring homes, which is a lot better than falling in love with a house and then finding out what it costs.
If you're thinking about buying in Jacksonville, St. Johns County, or anywhere around Northeast Florida and want to talk through your options, give me a call. No pressure, no sales pitch, just a straight answer.
Sources: Mortgage Bankers Association, Freddie Mac, Northeast Florida Association of REALTORS® (September 2026 data via News4JAX).