Financial Trends for 2026

1. Inflation Is Expected to Remain Slightly Elevated

After a tumultuous few years of rising prices, inflation is projected to stay modestly above the Federal Reserve's 2% target throughout 2026. The Congressional Budget Office forecasts the personal consumption expenditures (PCE) price index—the Fed's preferred inflation measure—will reach 2.4% in 2026, down from an estimated 3.1% in 2025.

The Federal Reserve projects a similar trajectory, with inflation settling at 2.6% by year-end 2026. This gradual cooling follows temporary spikes driven by tariff policy and supply chain adjustments.

According to CME Group, which tracks the likelihood that the federal funds rate will change, most traders are expecting the short-term rate to range from 2.75% to 3.25% by December 2026, down from the current target rate of 3.75% to 4%.

For consumers, this means some relief from the dramatic price increases of recent years, though everyday expenses will likely continue rising faster than pre-pandemic norms.

Learn more: How the Fed Rate Cuts Impact Your Finances

2. Home Prices Are Projected to Rise Modestly

The housing market is expected to see steady but unspectacular price growth in 2026, with most forecasters predicting gains in the low-to-mid single digits. The National Association of Realtors (NAR) anticipates a 4% increase in median home prices, while other projections are more conservative.

For example, Fannie Mae forecasts just 1.3% appreciation, while Zillow's latest outlook calls for 1.2% growth between November 2025 and November 2026.

This modest growth reflects a market finding its equilibrium after years of volatility. While inventory is gradually improving and mortgage rates are stabilizing, affordability remains an issue for many buyers. Home prices won't see the dramatic spikes of the pandemic era, but they're also unlikely to fall significantly in most markets.

Learn more: Housing Market Predictions: What to Expect

3. Household Debt Levels Will Stay High

American consumers are carrying record levels of debt, and that burden isn't expected to lighten in 2026. U.S. consumers collectively owed $18.33 trillion in total debt in mid-2025, according to Experian data, with an average debt balance of $104,755.

The combination of elevated mortgage balances, growing credit card debt and persistent auto loans is keeping debt levels elevated even as the economy slows.

Credit card delinquencies have climbed above pre-pandemic levels, with 7.05% of balances delinquent by 90 days or more, according to the Federal Reserve Bank of New York. This uptick signals financial stress among some households, particularly middle-income Americans who have seen their savings depleted and face higher interest rates on variable-rate debt.

Learn more: Average American Debt by Age, US State, Credit Score and Type

4. Mortgage Rates Not Likely to Budge Much

Homebuyers hoping for dramatically lower mortgage rates in 2026 may be disappointed. While rates have declined from the 7% territory, most forecasters expect them to hover in the 6% range throughout next year with minimal movement.

Fannie Mae projects the average 30-year fixed mortgage rate will start 2026 at 6.2% and gradually decline to 5.9% by year-end. The Mortgage Bankers Association takes a more conservative stance, predicting rates will fluctuate between 6% and 6.5% throughout 2026. The National Association of Realtors expects rates to average around 6% for the year.

These modest projections reflect the Federal Reserve's cautious approach to further rate cuts and persistently elevated long-term Treasury yields. While the Fed has initiated rate reductions, mortgage rates are more closely tied to the 10-year Treasury yield, which remains elevated due to inflation concerns and federal borrowing levels.

For buyers and refinancers, this means mortgage rates will offer limited relief. The dream of sub-5% rates appears distant barring an unexpected economic downturn. Those comfortable with current payment levels shouldn't wait for dramatic rate drops that may not materialize.

Learn more: Current Mortgage Rates: What Will You Pay?

5. Expect the Jobs Market to Be Tight

The robust labor market that characterized recent years is expected to soften considerably in 2026, with unemployment projected to rise and hiring to slow significantly. In a survey of professional forecasters, the Federal Reserve Bank of Philadelphia projects that the unemployment rate will climb from its current 4.4% level to 4.5% in 2026.

While that's not significant, monthly job creation is expected to decelerate sharply, with forecasters predicting average gains of just 55,200 per month—less than half the 2025 average of 125,100. This slowdown reflects multiple pressures, including AI-driven automation, immigration policy changes, federal workforce reductions and businesses' focus on cost-cutting amid economic uncertainty.

While these figures represent a cooling labor market rather than a collapse, job seekers will likely face stiffer competition for positions. The unemployment rate is projected to peak in early 2026 before gradually improving later in the year as economic growth stabilizes.

6. Federal Student Loan Options and Repayment Plans Set to Change

Student loan borrowers face significant changes in 2026 as the federal repayment system undergoes its biggest transformation in years. Starting July 1, 2026, a new Repayment Assistance Plan (RAP) will replace most existing income-driven repayment options, fundamentally altering how millions of Americans manage their student debt.

Other repayment plans, including graduated and extended repayment options, will be eliminated for new borrowers. The One Big Beautiful Bill Act (OBBBA), which was passed in the summer of 2025, also eliminates the direct PLUS loan program for graduate and professional students.

The new RAP calculates payments based on adjusted gross income rather than discretionary income, with monthly bills ranging from 1% to 10% of earnings and a $10 minimum payment for all borrowers.

Critically, it also extends the forgiveness timeline to 30 years, which is significantly longer than the 20- to 25-year periods under previous plans. And starting in 2026, any debt forgiven through income-driven repayment will be treated as taxable income.

Learn more: Options if You Can't Pay Your Student Loans

7. Stock Market on Track for More Gains

Wall Street forecasters are projecting another strong year for stocks in 2026, with most major banks predicting the S&P 500 will reach new record highs.

JPMorgan has set a year-end target of 7,500 for the benchmark index—a 9.8% increase from the closing value on December 2, 2025—with potential upside to 8,000 and beyond if the Federal Reserve cuts rates more aggressively than expected.

Other prominent forecasts are similarly bullish on the S&P 500: Morgan Stanley and Wells Fargo both project 7,800, Deutsche Bank calls for 8,000 and Goldman Sachs expects 7,600. The optimism stems from expectations of robust corporate earnings growth, particularly in technology and AI-related sectors, continued artificial intelligence infrastructure investment and supportive monetary policy as the Fed maintains or extends rate cuts.

That said, the stock market can be incredibly volatile in the short term, and your actual results will depend on your portfolio holdings and several other variables.

How to Improve Your Finances in 2026

Whether you're still working on your financial resolutions for 2026 or you're just trying to get by, here are some steps you can take to improve your financial situation through the rest of the year:

• Start a budget. If you don't already have one, now is an excellent time to make a budget for your monthly expenses. You can start by looking at your income and expenses over the past few months to get an idea of whether you're living within your means. You can also categorize your expenses for a more detailed view of where your money is going. Then, evaluate different budgeting plans to determine which one's best for you.
• Take advantage of high savings rates. While interest rates on savings products are expected to come down along with the federal funds rate, take advantage of elevated rates while you still can. Take some time to learn more about and compare high-yield savings accounts and certificates of deposit to determine the best path for you.
• Check your credit. Your credit score is a crucial component of a financial plan, especially when it comes to qualifying for low interest rates. Check your FICO^® Score^Θ and Experian credit report for free to get an idea of where you stand and identify different steps you can take to improve your credit.
• Tackle high-interest debt. Debt payments can put a strain on your budget, especially if it's high-interest credit card debt. If you're carrying a balance on one or more credit cards, evaluate your debt situation and develop a strategy to pay down your credit card debt as quickly as possible to give yourself some more breathing room.
• Evaluate your investment strategy. If you have a retirement plan or other long-term investment strategy, evaluate your current approach and consider adjustments as needed. This may include raising or lowering how much you're investing, adjusting your portfolio's holdings to align better with your goals or working with a financial advisor to get some expert personalized guidance.

Ultimately, the steps you take to improve your finances in the coming year will depend on your current situation and your financial goals. As you consider these and other steps, focus on what makes the most sense for you.

The Bottom Line

Consumers may get a little financial relief next year in the form of lower interest rates, and investors may also enjoy another good year in the market. However, the job market may get rougher and most Americans will still feel the pressure of high mortgage rates and consumer debt, especially with the latest student loan developments.

Although there are several factors that impact your finances that are outside of your control, keeping up with financial trends can help you plan for the future and make smart financial decisions to make the most of what you have.