Mortgage Interest Rates Forecast

It’s been a while since we’ve seen mortgage rates start with a five, but here we are. The average 30-year fixed rate dropped to 5.83% this week, according to rates provided to NerdWallet by Zillow. The decline followed a cooler-than-expected inflation report that gave markets hope the Federal Reserve could soon begin cutting rates. For homeowners with solid equity, that could open the door to refinancing. And for winter house hunters? It’s a welcome break after months of stubbornly high borrowing costs.

But before we celebrate too much, there’s another inflation report right around the corner. The Fed’s preferred measure, the Personal Consumption Expenditures (PCE) index, drops next, and it could change the mood fast. If PCE confirms inflation is cooling, mortgage rates could drift even lower. If it shows inflation heating back up, expectations for rate cuts may fade, and rates could climb again just as quickly.

» MORE: How the Fed affects mortgage rates

February mortgage rates forecast

Now that rates have slipped below 6%, the big question is whether they’ll stay there. Most projections suggest modest movement in the near term, with spring likely bringing clearer direction.