Mortgage rates are expected to remain relatively high in the near term, with gradual easing likely by the end of 2025 or into 2026. Experts generally agree that the average 30-year fixed mortgage rate currently hovers around the mid to upper 6% range and is unlikely to drop significantly in the short term. Key points from recent forecasts:
- Rates may dip into the mid-6% range by mid-2025 if inflation remains subdued and the labor market weakens, allowing the Federal Reserve to cut rates further.
- The National Association of Home Builders expects rates to be around 6.5% by the end of 2024 and drop below 6% by the end of 2025.
- Fannie Mae expects a gradual decline in rates through 2025, starting at about 6.6% in late 2024 and slightly lower thereafter.
- The Mortgage Bankers Association projects the rate to average 6.6% in late 2024 and decline to about 6.5% in mid-2025, with further slow decreases beyond that.
- The housing market is expected to remain cautious, as further rate cuts depend on economic data such as inflation and job growth.
- Some forecasts suggest rates could stay near 7% through most of 2025 before improving in 2026, with refinancing opportunities expected then.
In summary, mortgage rates are unlikely to drop sharply in the immediate months ahead. A gradual decline may begin in mid to late 2025, contingent on economic conditions favoring Federal Reserve rate cuts. For now, rates are expected to remain elevated in the mid-6% to around 7% range through much of 2025.
