2026 Mortgage Rate Predictions: This “X Factor” Could Change Everything - BiggerPockets Real Estate Podcast Recap

Podcast: BiggerPockets Real Estate Podcast

Published: 2025-12-01

Duration: 29 min

Summary

In this episode, Dave Meyer discusses his predictions for mortgage rates in 2026, emphasizing the critical role of affordability in the housing market. He also highlights an 'X factor' that could significantly alter these rates.

What Happened

Dave Meyer kicks off the episode by addressing the pivotal question of where mortgage rates are headed in 2026, which he believes will heavily influence the housing market and real estate investment strategies. He acknowledges the various opinions floating around, some of which he finds solid and others dubious. Meyer then shares his personal predictions, backed by historical accuracy from previous years, and indicates that affordability remains the most important aspect driving the housing market. He believes that while other factors like labor market conditions and inflation matter, mortgage rates are the most volatile variable affecting affordability.

As the conversation progresses, Meyer reflects on the positive trend in mortgage rates from 2025, noting a drop from around 7.2% in January to the current range of 6.2% to 6.4%. He attributes this to two main factors: the yield on 10-year U.S. Treasuries and the mortgage spread. Meyer explains how these elements interact, emphasizing that the average homeowner is riskier than the U.S. government, thus necessitating a risk premium or spread in mortgage rates. He breaks down how mortgage rates generally correlate with Treasuries and discusses the current state of spreads, which have slightly improved this year. Meyer concludes by touching on the Federal Reserve's influence, clarifying that while it matters, it’s not the sole factor to consider when forecasting rates.

Key Insights

Key Questions Answered

What are the main factors influencing mortgage rates?

Dave Meyer identifies affordability as the central factor in the housing market, with mortgage rates being the most volatile variable affecting it. He discusses how other economic factors, like labor markets and inflation, play a role, but ultimately believes mortgage rates drive affordability more than anything else.

How have mortgage rates changed from 2025 to 2026?

In the episode, Meyer notes that mortgage rates fell from about 7.2% in January 2025 to around 6.2% to 6.4% as of November 2025. This decline is viewed positively, especially given that many forecasts predicted rates would stay higher, further demonstrating Meyer’s accuracy in his predictions.

What is the relationship between mortgage rates and U.S. Treasury yields?

Meyer explains that mortgage rates are closely tied to the yield on 10-year U.S. Treasuries because investors view Treasuries as the safest investment. Since mortgages are long-term loans, they often look at the 10-year yield as a benchmark, as the average duration of a mortgage before refinancing or selling is also around ten years.

What is a mortgage spread and why is it important?

A mortgage spread is the risk premium that lenders charge over the 10-year Treasury yield to account for the increased risk of lending to average homeowners. Meyer emphasizes that this spread is crucial for understanding mortgage rates, as banks will not lend at the same rate as the U.S. government due to the higher likelihood of default by homeowners.

How does the Federal Reserve impact mortgage rates?

Meyer acknowledges that while the Federal Reserve's actions do have an impact on mortgage rates, they are not the only factor to consider. He focuses instead on the yield of Treasuries and the mortgage spread as more significant indicators for predicting future rates, suggesting that the market's dynamics are influenced by various elements beyond just Fed policy.