From Rate Cuts to Rising Debt: What 2026 Will Look Like for Your Wallet

Written by  Matt Schulz

Edited by  Dan Shepard

+ 1 More

Updated Dec 15, 2025 Content was accurate at the time of publication.

On the heels of an uncertain 2025, what might 2026 hold?

While uncertainty isn’t going anywhere, I’m confident about a few things the new year has in store. Scroll on for my 2026 predictions — plus the key moves you can make to prepare.

Prediction No. 1: Mortgage rates dip below 6.00% but don’t stay there

You may not realize this, but mortgage rates often move significantly throughout the year. 

For example, the average APR for a 30-year, fixed-rate mortgage reached 7.04% the week ending Jan. 16, 2025, according to government data. By the week ending Oct. 30, 2025, the average APR was 6.17%. That’s a difference of 0.87 points — almost a full percentage point.

That movement isn’t unusual. Consider the highest and lowest weekly average APRs in the prior five years.

30-year, fixed-rate mortgages: Differences in highest, lowest weekly average APRs

2022 is an outlier because the Federal Reserve raised rates seven times that year. Still, since 2000, the gap between the year’s highest and lowest weekly average APRs has never been lower than a half-point. Even excluding 2022, the average gap this century has been nearly a full percentage point. There’s little reason to think that’ll change in 2026.

However, that doesn’t mean rates will be dramatically lower at year’s end than at the beginning. The gap between the first and last weekly averages of the year tends to be significantly smaller than the one between the yearly high and low. The difference between the first and last weekly APRs of the year has been a quarter-point or less 10 times since 2000, including in 2023 and 2024. 

30-year, fixed-rate mortgages: Differences in first, last weekly average APRs

Given that, I expect mortgage rates to fall below 6.00% at some point in 2026, but I don’t expect them to stay there. Even if the Fed cuts rates multiple times in 2026, I think mortgage rates will be just slightly above 6.00% at the end of 2026. 

Prediction No. 2: New Fed chief pushes hard for extra rate cuts but doesn’t move the needle much

We don’t yet know who’ll replace current Fed Chairman Jerome Powell when his term ends in May, but all indications are that President Donald Trump will expect the new chair to advocate for more rate cuts in 2026.

That doesn’t mean the Fed’s going to take a flamethrower to interest rates in 2026, though. I expect no more than two rate cuts in 2026, regardless of who’s running the show.

The Federal Open Market Committee — the group that decides monetary policy — isn’t a one-person show, and the makeup of the group under the new chair will be largely the same as it was under Powell. Pressure from the new chair (and president) can certainly have an impact, but dramatic policy changes from the Fed are unlikely under the new chair.

One major caveat: The Supreme Court is expected to rule this term on two cases regarding the president’s authority to fire members of independent government agencies — one involving the Federal Trade Commission, the other involving the Federal Reserve itself. If the court sides with the president in these cases, it could lead to a greater shake-up at the Fed and increase the likelihood of additional rate cuts in 2026 and beyond.

Prediction No. 3: Refinances continue to rise, but homebuyers mostly remain on sidelines

Many Americans would love to buy a new home but can’t bring themselves to trade in their low mortgage rate for today’s higher rates. Barring an unforeseen plunge in mortgage rates, that’s not likely to change in 2026 — and that’s disappointing news for home shoppers. 

The news will be better for those looking to refinance their current high-rate mortgage. We saw a jump in refinances when mortgage rates fell in fall 2025, and that’s likely to continue as rates dip further in 2026.

How big a jump we’ll see depends on how far rates fall, but I think if they dip below 6.00% — even for just a short time — we could see a major spike in refinancing. Americans love their round numbers, and I suspect there’s a significant number of homeowners who would jump to refinance if rates fell below 6.00%.

Prediction No. 4: Debt, delinquencies keep rising, but consumers remain resilient

Mortgage debt, auto loan debt, credit card debt and student loan debt totals are the highest they’ve ever been, according to the latest government data. Delinquency rates are high, too, though nowhere near record levels. 

The bad news: All of that is probably going to get at least a little worse in 2026. Debt is going to grow, in part because that’s just what it does in America. Predicting rising debt is about as bold as predicting the sun to set in the west. Meanwhile, delinquencies will likely continue to rise, as Americans struggle with stubbornly high prices. 

There’s good news, however. Americans continue to handle their business in the face of persistent inflation, high interest rates, a wonky job market and overall economic uncertainty. Barring a major spike in unemployment, there’s little reason to think Americans are going to hit the wall in 2026.

Here’s one big reason: The percentage of our disposable income we put toward paying down debt is still below historical averages — and nowhere remotely near record highs.

Percentage of Americans’ disposable income that goes toward required debt payments

While debt is growing in aggregate, it isn’t growing so fast as to get out of most people’s control. That may seem crazy to say, given that Americans have $18.59 trillion in debt overall. However, the data shows that’s true.

Prediction No. 5: 50-year mortgages, portable mortgages not coming anytime soon

In hopes of shaking up a largely stuck housing market, Trump in 2025 floated the idea of a 50-year mortgage. The idea was that the lower monthly payments that would come along with the longer loan term could potentially spur more people to go home shopping. 

The proposal was met with skepticism from both parties. Many experts — including us at LendingTree — noted that while the 50-year mortgage would likely feature lower payments, it would also lead to homeowners paying far more interest and earning equity far more slowly over the life of the loan. That made it hard to recommend for most people.

The administration is also reportedly considering so-called portable mortgages to unlock the housing market. A portable mortgage — currently available in Canada and the United Kingdom but not the U.S. — allows you to take your current mortgage with you when you move. Someone who bought a home with a 2.75% APR a few years ago would be able to keep it if they bought a new home today, avoiding today’s rates of more than 6.00%. 

Portable mortgages could be exactly what the doctor ordered, spurring Americans to buy homes today rather than sit on their hands waiting for rates to drop. However, we won’t see portable or 50-year mortgages as an option in 2026. Even if they become a reality here eventually, it’ll likely take years, and that certainly doesn’t help struggling homeowners today.

Prediction No. 6: Days of 4% returns on high-yield savings accounts coming to end

Falling rates are a double-edged sword for consumers. They’re awesome for people struggling with debt, but they stink for those looking to build their savings. Unfortunately, the news isn’t likely to improve for savers in 2026.

High-yield savings accounts (HYSAs) have been an amazing tool over the past few years. Returns of 4.00% or more — even 5.00% or more at their peak in 2024 — have helped Americans boost their emergency funds and turbocharge their ability to save for down payments on mortgages and cars. However, if the Fed lowers rates multiple times in the next year, those 4.00% HYSA returns are likely to vanish.

Prediction No. 7: No $1,000 mass-market credit card in 2026

It’s definitely coming someday. Just not yet. 

In 2025, we saw the next major step in the growth of high-end credit card annual fees with one megabank offering consumers a card with an $895 annual fee. Years ago, that annual fee would’ve elicited gasps. This past year, it generated plenty of headlines but little shock. 

We’ll almost certainly see a $1,000-annual-fee credit card from one of the biggest credit card issuers in the next two to four years. 

A 2024 LendingTree survey found that 3% of cardholders (6% of Gen Zers) would consider applying for a card with a $1,000 annual fee. That 3% is tiny, but it still equates to millions of potential customers. A separate 2025 LendingTree survey found that more than a third of cardholders wouldn’t cancel their current annual-fee cards if the fees increased by $100 while offering nothing new in return. That means that annual fees likely have plenty of room to grow before people turn away. 

Expect issuers to continue pushing those boundaries in 2026 and beyond. 

The key to preparing for 2026

More than anything else, uncertainty might have defined 2025. Unfortunately, 2026 promises to be unpredictable as well. 

So how can you make sure you’re as ready as possible for what’s ahead?

Control what you can control.

It’s so easy to feel powerless and helpless about your financial situation. The unfortunate reality is that there are a lot of forces at play that you can’t do anything about. That’s always been true and will always be true. However, it’s also likely true that you have control over more things than you think you do. By working on those things, you can help bring yourself some much-needed peace of mind during times of great uncertainty. And who doesn’t need that?