Redfin predicts mortgage rates change in 2026

Key PointsThe average 30-year mortgage rate is 6.30%, influenced partly by recent Fed rate changes.Fed independence is crucial for future mortgage rates; a new chair appointment announcement is expected January 2026.Investor activity in housing slows, but starter-home sales and listings see notable annual growth.While the average current 30-year fixed-rate mortgage (FRM) checked in at 6.30% on Dec. 10, according to Mortgage News Daily, homebuyers are looking ahead to 2026 even as they analyze current trends. That rate is slightly up from Dec. 4, when Freddie Mac released its Primary Mortgage Market Survey results that showed the 30-year FRM at 6.19%. On Dec. 10, a major move on interest rates was made, as the target range for the federal funds rate was lowered by 1/4 percentage point to 3-1/2 to 3-3/4 percent, according to the Federal Reserve. Fed decisions on interest rates have an impact on the housing market, and real estate technology company Redfin suggests that mortgage rates could be subject to change in 2026 depending, in part, on those judgments. “The Federal Reserve only directly sets the Fed Funds Rate, an overnight lending rate, which influences, but does not determine long term rates such as mortgage rates,” Redfin explained. Redfin says mortgage rates also depend on Fed independence Interest rate changes made by the Fed impact mortgage rates to some degree, but other factors are involved as well. “Mortgage rates are priced off of ten-year treasury yields, which are determined based on investors’ expectations for economic growth and inflation over the next ten years,” Redfin wrote. “Mortgage rates can move in the opposite direction of short-term rates like the Fed Funds rate, if investors believe, for example, that the Fed is cutting too much and risking higher inflation in the future.” View post: Redfin says mortgage rates, profits are hitting real estate nowReal EstateRedfin says mortgage rates, profits are hitting real estate nowThe housing market technology firm finds significant recent changes impact home buying and selling.Jeffrey Quiggle 0 Redfin emphasizes that Fed independence is key to predicting mortgage rate outcomes. So a lot depends on who President Trump selects to replace Fed chair Jerome Powell at the end of his term in May 2026. One leading contender is National Economic Council director Kevin Hassett. As a close advisor to President Trump, concerns about Hassett’s independence worry some economists. “This trade off between short term and long term outcomes is why the Fed’s independence is so critical,” Redfin wrote. “One recent example of the effect of eroding the Fed’s independence was on July 16, when Bloomberg reported that the President intended to fire the Fed Chair,” Redfin’s head of economics research Chen Zhao explained. “Long-term rates increased while short-term rates fell on the news until the President dismissed the report as inaccurate.” Announcement for new Fed chair may come in January A formal announcement on the new Fed chair is expected early in 2026, Redfin said. More on mortgages, housing market: Zillow sounds alarm mortgage rates, housing market Berkshire Hathaway HomeServices predicts housing market pivot Redfin sends strong message on mortgage rates “A formal announcement expected in January, but the news reports are likely intended to test the waters for (Hassett’s) candidacy,” Zhao wrote. “While the Fed Chair is often portrayed as setting interest rate policy, the reality is more nuanced.” “In order for a Fed Chair to be successful in guiding monetary policy, s/he must have the confidence of both their fellow FOMC colleagues and financial markets.” Redfin explains recent home purchase investor activity Investor activity in the U.S. housing market slowed during the third quarter, with home purchases rising just 1% compared to the same period last year and overall market share edging up only slightly. Buying levels remain subdued as profitability for flippers and landlords has declined; the proportion of investor-owned properties sold at a loss has reached its highest point in two years. Despite these challenges, some investors continue to act, capitalizing on reduced competition in the market. Condo purchases by investors fell marginally year over year, but remain close to their lowest levels in nearly a decade. The sharpest declines in investor activity are occurring in Las Vegas and Florida. Redfin reports starter-home sales climb 5% Sales of starter homes climbed 4.9% compared with last year, marking the 14th straight month of growth. By contrast, mid-tier home sales edged up 0.7%, while high-end home sales increased 0.8%. The median price for starter homes rose 2% year over year, reaching $260,000 in October. Listings of starter homes expanded 13% from a year earlier, bringing inventory to its highest October level since 2016. San Francisco posted the strongest gain in starter-home sales at 19.5%, followed by Providence at 13.0% and Portland at 12.9%. The steepest drop occurred in San Antonio at 9.6%, with Detroit down 7.9% and Nashville off 5.5%. View post: Redfin reports big housing market news for homebuyersReal EstateRedfin reports big housing market news for homebuyersThe real estate technology company announces a significant new finding that involves good and bad news on buying a home.Jeffrey Quiggle 0 About the authorJeffrey QuiggleJeffrey Quiggle is an editor and reporter for TheStreet with 30 years of experience in digital media. He writes about personal finance, real estate, retirement savings, 401(k)s, Social Security, Medicare, investing, business and airlines. Previously, he had various journalism and content roles at Microsoft's Bing, Windows and MSN, at The American Prospect magazine and at Harvard University. Start the Conversation