Bankrate’s Interest Rate Forecast for 2026: See what’s next for mortgage rates, credit card rates, auto loans and more

Core Insights - The Federal Reserve is expected to cautiously cut interest rates to support a cooling job market while aiming for a 2% inflation target [2][3] - Political pressure may influence the Fed's decisions, potentially leading to concerns about inflation if rate cuts are perceived as politically motivated [3][4] - The forecast indicates that mortgage rates could fall below 6% in 2026, which may help alleviate housing affordability issues [9][12] Interest Rate Forecast - The Fed is projected to cut interest rates by 0.75 percentage points in 2026, bringing rates close to pre-pandemic levels [6] - The average 30-year fixed mortgage rate is expected to average 6.1% in 2026, with a range between 5.7% and 6.5% [9][16] - Home equity loan rates are forecasted to average about 7.75% in 2026, with HELOC rates averaging around 7.3% [18][20] Auto Loan Forecast - Five-year new car loan rates are projected to average about 6.7% in 2026, with a range from 6.4% to 7% [25][26] - Four-year used car loan rates are expected to average 7.1%, with a high of 7.4% and a low of 6.8% [26] - Despite lower interest rates, high car prices remain a significant challenge for affordability [30] Savings and CD Rates - The top savings account rate is expected to fall to about 3.7% by the end of 2026, while the national average savings rate will drop to approximately 0.45% [33][36] - The highest-yielding one-year CD is projected to ease to roughly 3.5% by the end of 2026 [34] - Competition among banks is expected to keep savings yields relatively higher compared to borrowing costs [36][41] Credit Card Rate Forecast - Credit card rates are expected to range from a high of 19.7% to a low of 19.1% in 2026, averaging 19.4% [42][44] - The average credit card balance holder would see minimal savings from rate cuts, with significant debt remaining a concern [45][47] - Credit cards are characterized as a high-cost form of debt, making it difficult for borrowers to escape [46]