Derek McGowan argues mortgage rates will keep falling through 2026 as inflation cools. The CPI overstates rent increases by using old data, he says, showing 3% when current rent growth is closer to 1%. He advises buyers to start now before lower rates push prices up.
I dug into the data and found pretty optimistic info about how mortgage rates should continue to hold on to the recent drops and move lower through 2026. I know what you're thinking. Mortgage rates have already dropped and then volatile. Why the heck would they continue to drop? Inflation. So if you follow me for a while, you know how important inflation is when it comes to mortgage rates and cpi, inflation is by far the most important inflation indicator. However, CPI is really antiquated and a third of it is made up by shelter. So that's so impacted by one sector when there's eight different sections that are supposed to make up cpi. When you take that one step further, shelter is rent. And some mortgage payment rents are pretty skewed right now. Currently the CPI inflation report is showing that rents are up 3% year over year. But that's a month or two lag from that data. If they go off of today's current data, this is what I found. It's actually showing just a 1% increase in rents year over year. That news is already out and CPI knew about that. Mortgage rates will already be lower. Things continue on the same trajectory that they are. In about a month or two, mortgage rates will be lower. This means if you're a home buyer, when rates go low, competition goes up, house prices go up. So you'd want to start the process now if you're a savvy home buyer.
