Mortgage rates above 6% will keep homebuyer costs elevated compared to pre-2022 averages, according to the firm’s June 16, 2026, report.
Mortgage rates briefly dipped below 6% in February 2026, offering temporary relief to homebuyers before climbing back above 6.5%. The improvement was short-lived, with rates remaining above 6% since then.
Morgan Stanley’s analysis modeled affordability under three rate scenarios—4%, 5%, and 6%—and found none restore pre-2022 conditions. Even at 5%, mortgage payments would consume 21% of household income, well above the 15% average seen post-2009 financial crisis.
The firm’s base case assumes rates settle near 5%, but affordability remains strained. At 6%, the most likely scenario, conditions worsen further, leaving buyers with limited options.