March Mortgage Outlook: Lower Rates Ahead

We’re seeing interest rates on 30-year, fixed rate mortgages start with fives for the first time in three-and-a-half years, and rates’ downward trajectory is likely to continue in March. I’m not anticipating any major moves — just a continuation of what we saw last month.

Looking at daily mortgage rate movements will always show peaks and valleys that may appear stark, even if numbers-wise they aren’t that different. When we pull back and look at the big picture, those flatten out a bit and it’s easier to get a sense of the larger trend.

Since peaking (at least for last year) in May 2025, average 30-year mortgage rates have headed downward. We haven’t seen averages higher than 6.25% since November 2025, and at the end of February, rates fell below 6%.

This wider trend is likely less about the overall economy and more about behind-the-scenes support for the housing market. Government-sponsored enterprises Fannie Mae and Freddie Mac have been buying increasing amounts of mortgage-backed securities (MBS). These investments, which are essentially bundles of similar home loans, help keep the mortgage market moving.

When mortgage lenders close home loans, they often sell them on the secondary market, where they are packaged as MBS. Selling off the mortgages they’ve made gives lenders funds to offer new loans.

When MBS are being scooped up by institutional investors like Fannie Mae and Freddie Mac, whose goal is supporting the market rather than getting the best return, mortgage lenders can offer lower mortgage interest rates. Lenders know that, even with lower rates, the mortgages will have a guaranteed buyer.

We saw this happen during the pandemic when the Federal Reserve bought billions in MBS, and it seems like we’re seeing something similar happening now. Continued purchases by Fannie Mae and Freddie Mac would allow rates to keep drifting downward.

Frankly, there’s not much in the foreseeable future that would put upward pressure on mortgage rates, though that’s not an ironclad guarantee. Markets are anticipating the Federal Reserve will hold the federal funds rate steady at its meeting this month. A rate cut as early as June feels like a possibility, though that’s a while off. Still, if the markets get excited about lower interest rates, mortgage rates will likely drop in anticipation.

With the release of minutes from January’s Fed meeting in mid-February, we were reminded that some Fed governors are deeply concerned about inflation, and they made it clear that “lower” or “steady” aren’t the central bankers’ only options. If it looks like inflation is accelerating, those folks will have a stronger case against rate cuts — though they might still face an uphill battle as the Fed remains divided on the economic outlook.

Freddie Mac’s weekly mortgage rate survey has averaged 6.08% so far this quarter, which is slightly below expert forecasts. Fannie Mae expects 6.1% for Q1 2026 and raised their Q2 prediction to the same level. The Mortgage Bankers Association boosted its Q1 forecast to 6.2%, but anticipates stable 6.1% mortgage interest rates through the rest of the year.

Whether last month’s prediction was correct depends on your definition of “significantly higher or lower.” I didn’t expect big movements in the market and thought mortgage rates would be stable. And while monthly averages went down, it wasn’t a huge decline. NerdWallet’s mortgage index, which uses rates provided by Zillow, fell seven basis points; Freddie Mac’s monthly average dropped five basis points. (A basis point is one one-hundredth of a percentage point.)