I already compiled and posted my annual list of 2026 mortgage rate predictions.
But one more mortgage rate prediction just dropped, and it’s a doozy.
Yes, I’m being mostly facetious, but I still have to report it and let you digest it as you will.
It came during President Trump’s speech last night, where he briefly touched upon housing affordability.
Namely that it has improved during his first year in office, slowly restoring the American Dream in the process.
Trump Drops His 2026 Mortgage Rate Forecast
During a speech at the White House Wednesday evening, President Trump brought up a lot of things.
But the only thing pertinent to this post was his brief remarks about the housing market and mortgage rates.
He said, “The yearly cost of a typical new mortgage increased by $15,000 under Democrat rule. In 11 months. We’ve already gotten that annual cost down by $3,000 and it’s coming down a lot lower.”
This in reference to the 30-year fixed averaging around 7.25% in January versus about 6.25% today.
Adding that, “Wait until you see, the numbers are going to be shocking.”
He did the usual comparison to mortgage rates under Joe Biden, where they eventually skyrocketed late in his term due to the end of the Fed’s massive MBS buying spree known as QE.
Of course, Joe was also in office when mortgage rates hit record lows in 2021.
Anyway, forgetting the past and their ongoing rivalry, the part that stood out was Trump saying mortgage rates are going to come down a lot more.
And not just eventually, but “early in the new year.”
The irony is that for the 30-year fixed to improve markedly anytime soon, we’ll need more bad economic data.
Likely driven by a worsening labor picture with a higher rate of unemployment and jobless claims.
In other words, careful what you wish for when you’re promising materially lower mortgage rates in a short amount of time, but conveying the message that the economy remains strong.
We could potentially see mortgage rates improve for other reasons though, such as continued improvement in inflation readings, or more MBS buying from Fannie Mae and Freddie Mac, which would help with spreads.
The New Fed Chair Will Apparently Lower Interest Rates a Lot Too…
There’s also the thought of a new Fed chair being nominated, though that will happen later in the year when Powell’s term ends in May.
To that end, Trump said, “I’ll soon announce our next chairman of the Federal Reserve, someone who believes in lower interest rates by a lot.”
Most understand that the Fed doesn’t control mortgage rates, largely because they only focus on short-term overnight lending rates.
And mortgage rates are the exact opposite, very long rates such as the 30-year fixed mortgage.
However, there can be some correlation as Fed expectations can drive long rates, such as 10-year bond yields, lower.
But that only tends to happen if the underlying economic data warrants a drop in bond yields, typically because of cooler economic conditions.
So ultimately the Fed is simply reacting the news we already know and not the one actually pulling the strings.
If Trump has bigger plans, such as another round of QE that involves mortgage-backed securities (MBS, that’s a different story.
However, it seems very unlikely that’s the case so it’s best to ignore this stuff and continue to focus on the data.
I do give him a tiny little bit of credit for staying on message though and continuing to promise a glorious return to low mortgage rates, something he heavily campaigned on.
The good news is politics aside, the 30-year fixed is expected to dip into the 5s in 2026, even without direct intervention or a friendlier Fed.
Read on: How are mortgage rates determined?
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.