Will mortgage rates be better in 2025?
The National Association of Home Builders expects the 30-year mortgage rate to decrease to about 6.5% by the middle of 2025 and fall below 6% by the end of 2026, according to the group's latest outlook. Overall, the trade group forecasts that mortgage rates will average 6.65% throughout 2025 and 6.19% in 2026.
WASHINGTON, DC – Mortgage rates are now expected to end 2025 and 2026 at 6.3 percent and 6.2 percent, respectively, downward revisions of three-tenths for each, according to the March 2025 commentary from the Fannie Mae (FNMA/OTCQB) Economic and Strategic Research (ESR) Group.
While experts predict rates will move lower throughout 2025, it won't be a dramatic decline: Fannie Mae expects average 30-year fixed mortgage rates to remain around 6.5%. And with investors and lenders bracing for more news on Trump's trade agenda, more panic-based turbulence is likely in the coming months.
The Bank of England is forecast to cut interest rates three more times this year. The general consensus on the financial markets is that the base rate will end 2025 at 3.75 per cent, down from 4.5 per cent where it is currently.
It's unlikely you'll see a 3% mortgage rate anytime soon. According to Freddie Mac, the average interest rate on a 30-year fixed-rate mortgage is well over 6%. Mortgage rates hit historic lows in 2021 due to the Federal Reserve's response to the COVID-19 pandemic.
Expert Projections of Interest Rates in the Next Few Years
2025: 3.4% 2026: 2.9%
Federal Reserve keeps interests rates steady at 4.5%
At the March 2025 Federal Open Market Committee (FOMC) meeting, the Federal Reserve (Fed) kept interest rates steady at 4.5% for a second straight meeting.
The market forecast is that rates will fall to 3.75 per cent by the end of 2025, and then settle at around that level and become the new normal. However, Oxford Economics believes the downward momentum will continue through 2026 and 2027, with rates settling at around 2.5 per cent.
As a result, the first week following Trump's tariff news pushed interest rates down—as of April 3, one day after the president's announcement, the 30-year fixed-rate mortgage was 6.64%, down 0.01 percentage points from a week earlier and 0.18 percentage points from a year earlier, according to the Federal Home Loan ...
Should I lock in my mortgage rate today? Yes. Obtaining a mortgage rate lock as soon as you have an accepted offer on a house (and find a rate you're comfortable with) can help guarantee a competitive rate and affordable monthly payments on your loan.
Where will interest rates be in 2026?
Fannie Mae forecasts 30-year mortgage rates will close this year at 6.6 percent, and will end 2026 at 6.5 percent.
Fixing your mortgage for longer can give you greater certainty as you'll know exactly what your mortgage repayments will be for the next 5 or 10 years. However, fixing for a longer term normally comes with higher interest rates - although rates for 5 year deals are lower than 2 year deals at the moment.
Markets had previously priced in up to four rate cuts for 2025, but this expectation has now moderated. CBA economists are still expecting there will be a further three rate cuts from the RBA, while NAB thinks another four cuts will be handed down. Both banks expect the next cut will be in May.
Mortgage Rate Projection for 2025
Mortgage rates are expected to go down slightly in 2025, but exactly when they'll drop and by how much depends on the economy. If we enter a recession, mortgage rates may go down more quickly. But if tariffs cause inflation to rise, we could see rates go back up.
Mortgage assumptions allow buyers to take over an existing mortgage at its current rate, possibly securing mortgage rates as low as 2% or 3% depending on when the original mortgage was taken out.
National Association of Realtors: Mortgage Rates will average 6.4% in 2025 and 6.1% in 2026. “So mortgage rates can go down with a Fed rate cut if inflation is under control,” said Lawrence Yun. “But it's not going to go down to 4% mortgage rate conditions because we have a huge national debt…
The National Association of Home Builders: In its latest housing and interest rate forecast, NAHB predicts that mortgage rates will average 6.65% in 2025. It also believes rates could ease in 2026, decreasing to a yearly average of 6.19%.
United States Prime Rate. target range for the fed funds rate at 4.25% - 4.50%. interest rates will be on May 7, 2025. The U.S. Prime Rate is a commonly used, short-term interest rate in the banking system of the United States.
The ESR Group's latest forecast sees mortgage rates closing 2025 and 2026 at 6.5% and 6.3%, respectively, up from the previous forecast of 6.2% and 6.0%. Additionally, the ESR Group expects home price appreciation to decelerate to 3.5 percent in 2025, down from 5.8 percent in 2024.
Our mortgage rate forecast has been revised downward given the recent movements in the mortgage rate. We now expect the 30-year fixed-rate mortgage to average 6.5 percent in 2025 and 6.2 percent in 2026 (both down three-tenths from our February forecast).
When should you refinance your home?
When should you refinance your home? For many borrowers, it's best to refinance when you can lower your interest rate and plan to stay in your home long enough to recoup the refinance closing costs.
Altogether, US economic growth is expected to stall this year, with average annualized growth projected to step down from 2.5 percent in 2024 to just 0.1 percent in 2025 (see figure below).
In welcome news for prospective homebuyers, the 30-year fixed-rate mortgage is expected to fall to 6.3% by the end of the year and reach 6.2% by the end of 2026, according to Fannie Mae's latest economic developments report.
The U.S. housing market is likely to remain largely frozen through 2025. Some growth is still expected, but at a very subdued pace of 3% or less. Demand — often understood through existing home sales (EHS) — remains exceptionally low.
Home Price Growth Forecasts
3.8% in 2024, rising to 4.9% by 2027. Cautious perspective; prices stable. Expecting slight fluctuations, no significant increase.
