Should You Wait or Act Now?
Thinking about buying or refinancing a property? With mortgage rates still hovering around 6.85% in mid-2025, it’s normal to wonder whether waiting for 2026 makes more sense.
In this guide, we’ll help you cut through the noise, so you can make confident decisions in Dubai or wherever your next investment leads.
Mortgage Rate Forecast: 2025–2026
What Drives Mortgage Rates?
Rates are shaped by global forces, not just central bank policy:
- Federal Reserve & BoE interest rate decisions
- Inflation trends (especially CPI and PCE)
- US 10-Year Treasury yields (key mortgage benchmark)
- GDP forecasts (e.g. 2.1% for 2026)
- Housing inventory trends
- Global uncertainty (wars, trade, policy shifts)
- Investor sentiment across global bond markets
Where Are We Now? (June 2025)
- 30-year fixed mortgage: 6.85% (Freddie Mac)
- Inflation (CPI): 3.2% (above the Fed’s 2% target)
- 10-Year Treasury Yield: 4.28%
Are Today’s Rates High?
It depends on your benchmark:
- Long-term US average since 1971: ~7.71%
- COVID-era low in 2021: 2.65% (unprecedented)
- Peak in 1981: >16%
So yes, today’s rates are higher than recent years, but still below the 50-year average.
What Experts Expect?
Bottom line: A gradual decline is expected, but a return to the ultra-low 2–3% range of 2021 is unlikely.
What Could Lower Rates in 2026?
- Inflation drops near 2% – triggers Fed rate cuts
- Treasury yields fall further, lowering lender costs
- Economic slowdown – weakens borrowing demand
- Housing supply grows – easing pressure on affordability
What Could Keep Rates Elevated?
- Inflation is staying above 3%
- Economic growth outpacing forecasts
- Policy surprises (tariffs, debt, elections)
- Global instability is driving bond volatility
What Should You Do Now?
Lock Your Rate (If You’re Ready)
- You’re protected if rates rise.
- You can refinance if they drop.
Use the mortgage calculator on our Dubai property pages to compare rates, plan repayments, and explore your next move, 100% online!
Consider ARMs
- Adjustable-rate mortgages start lower.
- Ideal for short-term ownership or planned refinancing.
Prepare to Refinance
- If rates drop 0.5–1%, you could save £1,000+/year
- Run a break-even analysis to be sure.
Improve Your Profile
- Boost your credit score
- Save for a bigger deposit
- Lower your debt-to-income ratio
Final ThoughtsMortgage rates are unlikely to fall dramatically in 2026, but small, steady improvements are expected.
The best approach? Focus on long-term strategy. Find a property you can afford, act when the numbers make sense, and stay ready to refinance when the time is right.
FAQ
Q: Will mortgage rates fall below 6% in 2026?
Unlikely, but slower growth and lower inflation could bring rates close.
Q: Should I wait or buy now?
If you find a property within your budget, consider buying now and refinancing later.
Q: Are ARMs still a good idea in 2026?
Yes, if you plan to sell or refinance in 5–7 years.
Q: When is refinancing smart?
When your new rate is at least 0.5% lower, and you plan to stay long enough to recoup costs.
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