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Will mortgage rates in the U.S. rise or fall in 2025? Everyone, from your neighbors to friends, seems to have an opinion—but how reliable are they?
Let’s dive into insights from 7 experts and uncover a solid consensus.
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.
1) Goldman Sachs predicts mortgage rates will drop another 0.4% by 2025
By 2025, mortgage rates are expected to drop another 0.4%, continuing the steady decline seen since their peak of 7.8% in late 2023. Rates are already below 6.5% in 2024, and Goldman Sachs predicts they’ll keep falling slowly over the next few years, making it cheaper for people to borrow for a home.
This gradual decline should help improve affordability for homebuyers, even though the process will take time. Lower rates, along with steady income growth, are expected to balance out rising home prices and make housing more accessible by the end of the decade.
For now, the drop in rates hasn’t sparked a big jump in mortgage applications, mainly because rates fell after the usual busy spring buying season.
Still, Goldman Sachs believes that as rates continue to ease, more buyers will benefit, helping stabilize the housing market.
Sources: Goldman Sachs, Business Insider
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2) Wells Fargo estimates mortgage rates will drop to 5.55% by 2025
Wells Fargo predicts that 30-year fixed mortgage rates will drop to around 5.55% by 2025. This decrease is expected to make home buying more affordable and encourage more market activity.
Lower rates might help solve the "golden handcuffs" problem, as homeowners with ultra-low mortgage rates of about 3% have been reluctant to sell, keeping inventory tight. If rates fall to the 5.25–5.75% range, more homeowners might sell, increasing market inventory.
This combination of lower borrowing costs and higher inventory could provide a much-needed boost to the housing market.
Sources: Wells Fargo, Youtube, Fool, U.S. News
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3) Fannie Mae forecasts that the average 30-year fixed mortgage rate will decline to 5.7% in 2025
The Fannie Mae housing forecast predicts that the average 30-year fixed mortgage rate will decrease to 5.7% in 2025, continuing the decline from 6.6% in 2024.
This downward trend suggests more favorable borrowing conditions for homebuyers, potentially boosting demand in the housing market.
Source: Fannie Mae
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4) The Mortgage Bankers Association (MBA) forecasts that 30-year fixed mortgage rates will decline to 5.9% by late 2025
The Mortgage Bankers Association (MBA) forecasts that 30-year fixed mortgage rates will decline to 5.90% by the end of 2025 and remain near 6% in the long term, contributing to greater stability in the housing market.
Additionally, the MBA anticipates the spread between mortgage rates and Treasury yields will narrow in 2025, potentially reducing borrowing costs and enhancing opportunities for homebuyers, keeping rates around 6%.
These projections suggest a more favorable and predictable environment for prospective homeowners, with affordable mortgage rates on the horizon.
Sources: Mortgage Bankers Association, Fool, New ork Post
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5) NAR Chief Economist Lawrence Yun forecasts mortgage rates stabilizing near 6% with gradual cuts possible in 2025
Lawrence Yun is the Chief Economist for the National Association of Realtors® (NAR).
In his recent analyses, Yun has observed that mortgage rates, which previously hovered around 4%, are now expected to stabilize between 5.5% and 6.5%.
He suggests that this range may become the new normal for borrowers. Yun also anticipates potential interest rate cuts in 2025, possibly in four rounds, which could provide some relief to homebuyers by making financing more accessible.
However, he cautions that these reductions may not be as significant or rapid as some might hope, indicating that mortgage rates could remain around 6% for the foreseeable future.
Sources: NAR, Boston Agent Magazine
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6) Chief Economist at Bright MLS predicts mortgage rates will gradually decline but remain above 6% through 2025
Lisa Sturtevant, Chief Economist at Bright MLS, explains that mortgage rates are likely to drop slightly by the end of this year and early next year, though they may still fluctuate.
According to her, by the end of the year, rates could settle between 6% and 6.5%. For 2025, she predicts a slow but steady decline in rates.
However, unless inflation rises significantly, the average 30-year fixed mortgage rate is expected to stay above 6% for most of the year.
Finally, she thinks that Trump's fiscal policies "can be expected to lead to rising and more unpredictable mortgage rates through the end of this year and into 2025.
Sources: Bright MLS, ForbesAP News
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7) Morgan Stanley forecasts that by summer 2025, the 30-year fixed-rate mortgage will decrease to around 6.25%
Morgan Stanley forecasts a drop in mortgage rates by summer 2025, offering potential relief to homebuyers. For Morgan Stanley, the 30-year fixed-rate mortgage is expected to fall to around 6.25%, down from the current 7%, making borrowing costs lower.
This decline is tied to two main factors.
First, inflation is cooling, which might prompt the Federal Reserve to cut interest rates, indirectly lowering mortgage rates.
Second, Treasury yields, which heavily influence mortgage rates, are predicted to decrease.
Specifically, 10-year Treasury notes could fall to 3.75%, making mortgages more affordable.
Sources: Morgan Stanley, Norada Real Estate
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So, will U.S. mortgage rates drop in 2025? Yes, they will!
It looks like mortgage rates in the U.S. are set to drop in 2025. That's good news for anyone looking to buy a home or refinance their mortgage.
Several experts, including those from Goldman Sachs, Wells Fargo, and Fannie Mae, predict that rates will fall to around 5.5% to 5.9%. This is a significant decrease from the peak of 7.8% in late 2023. Lower rates mean cheaper borrowing costs, which could make home buying more affordable.
However, not everyone agrees on how low rates will go. Some, like Lawrence Yun from NAR, think rates might stabilize around 6%. But overall, the consensus is that rates will be lower than they are now, making it a potentially good time to consider buying a home.