Mortgage rates are currently experiencing a slight decline but are expected to remain relatively elevated, with only modest drops anticipated in 2025. Experts forecast that the average 30-year fixed mortgage rate will gradually decrease from the current mid-6% range to just below 6% by the end of 2025, but significant drops are unlikely soon. The Federal Reserve's recent rate cuts mainly influence short-term rates, with the impact on long-term mortgage rates like the 30-year fixed mortgage being more limited and uncertain.
Recent Trends and Forecasts
- The average 30-year fixed mortgage rate recently dropped to around 6.13%, the lowest since late 2022, following expectations around Federal Reserve rate cuts. However, mortgage rates can remain volatile around such economic events.
- The Federal Reserve cut its federal funds rate by 25 basis points recently, contributing to some downward pressure on rates but not a dramatic fall.
- Experts such as those from LoanDepot, NAHB, Fannie Mae, and others expect rates to hover in the mid-6% range through mid-2025 and then gradually move below 6% by the end of the year if inflation subsides and the economy weakens.
Longer-Term Outlook
- Mortgage rates may drop by approximately 0.5% to 1% over the course of 2025, depending largely on inflation, economic data, and Fed policies.
- In the US market, the rate reductions may be cautious and accompanied by some volatility, and large drops are not guaranteed outside recessionary contexts.
- In some European contexts like the Netherlands, mortgage rates might see similar mild declines, expected between 3.4% and 3.9% by the end of 2025.
Summary
The mortgage rate decline in 2025 is projected to be modest rather than steep, likely resulting in rates moving from around 6.5%-6.7% currently to just under 6% by the end of the year, with some potential small further decreases in the following year. Borrowers should not expect sharp drops immediately but may see gradual improvements if inflation and economic conditions continue to improve. This information is based on recent forecasts and expert analysis from multiple sources as of September 2025.