Mortgage Bankers Association Chief Economist Mike Fratantoni predicts rates won’t drop below 6% before 2028, citing budget deficits and inflation expectations as key obstacles.
Report: Shah J. Choudhury
October 20, 2025 — Mortgage Bankers Association (MBA) Chief Economist Mike Fratantoni has warned that mortgage rates are unlikely to fall below 6% anytime soon. While the Federal Reserve may cut interest rates twice in 2025, Fratantoni said inflation control measures will limit how low long-term rates can go. (realtor.com)
Fratantoni explained that rising government budget deficits and inflation expectations will continue to keep long-term rates elevated. He anticipates that 10-year Treasury yields will remain above 4%, keeping mortgage rates between 6% and 6.5%.
However, he noted that short-term dips in mortgage rates are possible, which could spur some refinancing activity. The MBA projects total home sales to exceed 5 million in 2026, up from 4.8 million in 2025.
MBA Deputy Chief Economist Joel Kan added that while mortgage payment affordability has slightly improved, it remains significantly higher than five years ago. Many borrowers are turning to adjustable-rate mortgages (ARMs) and FHA loans to manage rising costs.
Kan also cautioned that increased homeownership costs continue to present challenges for prospective buyers.
Key Facts:
• Forecast: Mortgage rates unlikely to drop below 6% in the near term
• Source: MBA Chief Economist Mike Fratantoni
• Factors: Budget deficits and inflation expectations limiting long-term rate reductions
• Outlook: Federal Reserve may implement limited rate cuts; home sales expected to rise