09/18/2026
🏡 Why I think mortgage rates will eventually trend down and why AI may actually play a part in it.
First, I don’t have a crystal ball. 🔮 This is simply my prediction based on what I’m watching in the markets.
One thing that gets misunderstood all the time: mortgage rates do not directly follow the Fed. Mortgage rates are influenced much more by the bond market, especially mortgage-backed securities and longer-term Treasury yields.
Right now, the average 30-year fixed mortgage rate is around 6.95%, and the 10-year Treasury has been trading around 5%.
Here’s where I think AI gets really interesting.
AI has become a MASSIVE part of the investment story in the stock market. Spending on AI infrastructure is projected to approach $800 billion this year, and some estimates have it exceeding $1 trillion in 2027.
In my opinion, AI is eventually going to do one of two things:
AI BOOMS: ⬆️
If AI delivers on the productivity gains everyone is expecting, companies may become more efficient, labor productivity could increase, and over time that could help reduce inflationary pressure. Lower inflation generally creates a better environment for lower long-term interest rates.
OR AI BLOWS UP: 💣
If the AI trade turns out to be overvalued or investors lose confidence in AI-related stocks, money could move out of riskier assets and into safer assets like U.S. Treasuries.
When investors BUY Treasuries, bond prices rise and yields generally fall.
And when Treasury yields fall, mortgage rates tend to get some relief too.
We’ve already seen how important AI has become to the overall stock market, and recently even concerns about AI spending and development have created major swings in technology and semiconductor stocks.
Now, does that mean mortgage rates are guaranteed to fall? Absolutely not.
Inflation, government debt, oil prices, the Fed, employment numbers and Treasury supply all matter too. In fact, some of those forces are currently pushing rates in the opposite direction.
But looking further out, I believe there is a path for mortgage rates to trend lower and ironically, whether AI becomes one of the biggest productivity revolutions in history OR the AI investment boom loses steam, AI could ultimately become one of the forces that pushes long-term rates lower.
Again no crystal ball here. 🔮
Just my prediction based on how I’m reading the bond market, the stock market and where money is flowing.
And this is exactly why I tell buyers: don’t make a real estate decision based only on what you think rates might do next. Buy when the house and payment make sense for you. If rates improve later, refinancing may become an opportunity.
