Investing.com -- The Economic and Strategic Research (ESR) Group of Fannie Mae (OTCQB: OTC: FNMA (ST: FNMA )) has revised its mortgage rate outlook for 2025 and 2026, predicting rates to end at 6.3 percent and 6.2 percent respectively. This marks a three-tenths reduction for each year, as stated in the group’s March 2025 commentary.

This lower mortgage rate outlook has led to a slight upward adjustment in the ESR Group’s predictions for existing home sales in 2025, although overall expectations for total home sales remain subdued. The real gross domestic product (GDP) on a Q4/Q4 basis is now projected to be 1.7 percent in 2025 and 2.1 percent in 2026. These figures represent modest downward revisions due to weaker incoming data and a clearer understanding of trade policy.

Mark Palim, Fannie Mae Senior Vice President and Chief Economist, expressed his belief that the recent decrease in mortgage rates will give a small boost to home sales this year. "While our latest forecast calls for a period of modestly slower economic growth, historically, interest rates have been the most important driver of home sales," he said.

Palim further noted that the ESR Group anticipates mortgage rates to decrease even further within the next quarter and ultimately close the year at approximately 6.3 percent. This could potentially encourage additional sales from prospective buyers who are currently waiting on the sidelines.

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