Updated 02/18/2026
Interest rates nudged a tiny bit down below 6% into the high fives, around 5.875%. There should be some relief when the new Fed chairman comes in later this spring. Maybe I’m overly optimistic but I think rates will drop down 1/2% or more this year. I think that could be a trend that follows through next year, bringing rates to the high 4%’s over the next 18 months. If I were buying a home right now I would not pay points for a lower interest rate but buy now and wait till rates are down and then refinance. Hopefully I’m right. The following link is not necessarily the absolute best rates, so shop around or call me and I give you a few referrals. Click Here To See Current Interest Rates
Why do I think rates will go lower over the next two years? The Federal Reserve has three guidelines they use to adjust interest rates, recessions, inflation and GDP to debt ratio.
First, we are currently in a mild recession and although numerous large manufacturers have committed to bringing manufacturing back to the United States, it will likely take about two years before we see a significant boom in the economy. Second, although inflation until last year was around 8% is currently down to around 2.6%, which is considered perfect. Third our gross domestic product or GDP is around 31 trillion and our national debt is a little over 38 trillion. That ratio of 1 to 1.25 needs to be lower than 1 to 1. Though paying off 8 trillion in a short period of time is impossible raising our GDP by that much in a few years is not and likely will happen with the additional manufacturing coming back to the United States. Any movement bringing those numbers closer to a more ideal 1 to 1 will give the feds added incentive to lower rates.
This scenario which is already in place suggests rates should come down in 2026 and 2027 to cover the current mild recession we’re in, to reflect the now low inflation rate of 2.6%, and over the next two years a significant growth in the GDP to improve our GDP to debt ratio.
Click here to See All Government Debt In Real Time. You won’t believe your eyes!
If you have any questions, feel free to call me. Alex Schauffert 707 332 8301
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