Will mortgage rates stay above 7% in 2027?

Two recent forecasts suggest mortgage rates could remain above 7% into 2027, a prospect with wide-ranging implications for the housing market. For buyers, elevated borrowing costs translate into higher monthly payments and reduced purchasing power, particularly for first-time purchasers working with tighter budgets. For sellers, persistently high rates can discourage existing homeowners from listing, especially those holding loans at much lower rates, which keeps inventory constrained.

The broader market relevance lies in how sustained high rates shape affordability and transaction volume. When financing costs stay elevated, demand tends to cool, price growth may moderate, and activity can shift toward cash buyers or those less sensitive to rate changes. Regional variation matters too, since markets with stronger income growth or limited supply may absorb higher rates differently than more stretched areas.

What to watch: the path of inflation, Federal Reserve policy signals, and the spread between the 10-year Treasury yield and mortgage rates. Any meaningful decline in those drivers could ease borrowing costs sooner than these forecasts imply.