Mortgage Rates Drop To 7.34%, But Fannie Mae Now Sees Them Climbing Higher

The average rate on a 30-year fixed-rate mortgage fell seven basis points to 7.34% APR in the week ending October 15, breaking a seven-week streak of increases, according to rates NerdWallet obtained from Zillow.

The dip comes right after Fannie Mae sharply raised its own rate forecast on October 12. The agency now expects 30-year rates to average 7.4% in the fourth quarter of 2026 and climb to 7.5% in early 2027, up from last month's prediction of 6.8% and 6.7% for the same periods, a swing of 80 basis points. On a $400,000, 30-year fixed mortgage, that difference works out to roughly $216 more per month, or about $2,592 more per year, compared with the earlier, lower forecast.

The revision follows a Consumer Price Index report showing inflation rose 3.7% year over year in September, driven partly by a 9.1% jump in gasoline prices. Mortgage lenders raise rates when they expect the Federal Reserve to hike its benchmark rate to fight inflation; futures traders initially priced in higher odds of a hike at the Fed's October 27-28 meeting before dialing those expectations back the next day.