Last updated: November 1, 2026 · Updated after each central bank decision · By the MortgageCompass Editorial Team · How we research
Short answer: most forecasters do not expect mortgage rates to fall soon. In the US, Fannie Mae now expects the 30-year fixed rate to average about 7.4% at the end of 2026 and 7.5% through 2027, and the Mortgage Bankers Association expects rates to stay above 7% through 2027. Central banks in Australia and Canada are still raising rates to fight inflation, the US Federal Reserve held its rate in October after raising it in September, and the Bank of England is split. Canada joined the rate-raisers on October 28, 2026.
Forecasts are not promises. Below we set out what each central bank has done, what forecasters and markets expect, and how to plan your budget for a range of outcomes rather than a single guess.
Where rates stand and where forecasters see them going
| Country | Latest central bank move | Typical mortgage rate now | Outlook | Next decision |
|---|---|---|---|---|
| United States | Fed held its target range at 3.75% to 4% on Oct 28, 2026, after a rise on Sep 16; two members voted for another rise | 30-year fixed 7.24% (Freddie Mac, Oct 29) | Fannie Mae: 7.4% in late 2026, 7.5% through 2027. MBA: above 7% through 2027 | Dec 9, 2026 |
| United Kingdom | Bank of England held Bank Rate at 3.75% on Sep 17, 2026, with 3 of 9 members voting for a rise | Average 2-year fix 5.97%, 5-year 5.99% (Moneyfacts) | Markets have priced in a higher path, which has pushed fixed rates up | Nov 5, 2026 |
| Canada | Bank of Canada raised its policy rate to 2.50% on Oct 28, 2026, its first change since October 2025 | 5-year fixed from about 4.59% insured, variable from about 3.66% (nesto, Oct 29) | Bank expects inflation near 3.5% by year-end and back to 2% around mid-2028 | Dec 9, 2026 |
| Australia | RBA raised the cash rate to 4.60% on Sep 29, 2026, its fourth rise this year | Average variable 6.63% (Canstar) | RBA says inflation is still too high and upside risks are materialising | Nov 3, 2026 |
For the details behind each row, see our pages on current rates in the US, the UK, Canada and Australia.
Why rates are high and what would bring them down
Mortgage rates follow two things: central bank policy rates, which drive variable and tracker loans, and government bond yields, which drive fixed rates. Both have been pushed up this year by inflation that has proved stickier than expected, partly because of higher energy prices. The MBA expects the US 10-year Treasury yield to average about 5.1% in the last quarter of 2026 and stay near 5% through 2027, which is why it sees 30-year rates staying above 7%.
For rates to fall meaningfully, forecasters would need to see several of these at once:
- Inflation coming down steadily toward the 2% to 3% targets most central banks use.
- Energy prices easing, which would take pressure off inflation quickly.
- A slowdown in jobs and spending, which would lead central banks to cut.
- Lower bond yields, as investors move into safer assets or expect cuts.
Plan for a range, not a single forecast
Forecasts change quickly. Fannie Mae’s own 2027 forecast rose from 6.7% to 7.5% in a single month. A safer approach is to check whether your budget still works if rates move a full point either way. The planner below uses this month’s typical rate in each country as a starting point.
Rate scenario planner: can your budget handle the forecast?
Pick your country and see your payment if rates fall, stay where they are or rise further, and what share of your income each one would take.
Principal and interest only, monthly compounding, with the new rate applied to the full loan. Default rates are this month’s typical figures from our country rate pages, not forecasts. Many lenders treat housing costs above about 30% to 35% of gross income as a strain. Not financial advice.
Illustrative example. On a US loan of $400,000 over 30 years, a one-point rise from 7.24% to 8.24% adds about $276 a month, taking the payment from about $2,726 to $3,002. A one-point fall would save about $266 a month. If the higher figure would leave you stretched, consider borrowing less, putting down more or choosing a fixed rate that removes the risk for a set period.
What to do depending on your situation
- Buying soon: base your budget on today’s rates, not hoped-for cuts. If rates do fall, refinancing later is an option, but it is not guaranteed and has costs. Our affordability guide helps set a realistic price.
- Deal or term ending soon: secure a rate early where lenders allow it, and keep comparing. In the UK and Canada you can often lock months ahead and switch if a better rate appears.
- On a variable rate: test your budget at a higher rate now. Building a cash buffer, or using an offset account in Australia, gives you room if rates keep rising.
- Waiting to refinance: work out the rate at which refinancing would pay off after costs, so you can act quickly if it arrives. Our guide on whether to refinance explains the break-even calculation.
Frequently asked questions
Will mortgage rates go down in 2027?
Major US forecasters currently expect rates to stay around 7% to 7.5% through 2027. That could change quickly if inflation falls faster than expected or the economy slows sharply. No forecast is reliable enough to base a purchase on.
Should I wait for rates to drop before buying?
Only if waiting suits you for other reasons. Nobody can time rates, home prices may also change, and rent keeps costing you in the meantime. If the payment fits your budget today with some room to spare, buying when you are ready is usually more sensible than waiting for a forecast.
Do central bank decisions change mortgage rates immediately?
Variable and tracker rates usually change within days or weeks. Fixed rates often move before the decision, because bond markets react to expectations. That is why fixed rates in the UK rose this autumn even though Bank Rate did not change.
Sources
- Federal Reserve: FOMC statement, October 28, 2026
- Federal Reserve: FOMC statement, September 16, 2026
- Bank of Canada: Policy rate raised to 2½%, October 28, 2026
- Freddie Mac: Primary Mortgage Market Survey, October 29, 2026
- Mortgage Bankers Association: October 2026 forecast
- Mortgage Professional America: Fannie Mae October 2026 housing forecast
This page is for informational purposes only and is not financial advice. Forecasts reflect the views of the organisations named on the dates given and may change at any time. Base decisions on your own budget and speak to a licensed adviser in your country.