What will the 30 year mortgage rate be in 2025?
The average 30-year fixed mortgage rate as of Thursday was 6.99%. By the final quarter of 2025, Fannie Mae expects that to slide to 6.0%.
Lawrence Yun, chief economist at the National Association of Realtors, even told CNBC that he doesn't think mortgage rates will reach the 3% range again in his lifetime.
The rates start at around 6.67% in June 2023 and gradually decline over the years. By July 2027, the rates have reached 3.11%. Throughout this period, there are fluctuations in rates, with some months experiencing slight increases and others seeing decreases.
In its April Mortgage Finance Forecast, the Mortgage Bankers Association predicts that mortgage rates will fall from 6.8% in the first quarter of 2024 to 6.4% by the fourth quarter. The industry group expects rates will fall below the 6% threshold in the fourth quarter of 2025.
The 10-year treasury constant maturity rate in the U.S. is forecast to decline by 0.8 percent by 2026, while the 30-year fixed mortgage rate is expected to fall by 1.6 percent. From seven percent in the third quarter of 2023, the average 30-year mortgage rate is projected to reach 5.4 percent in 2026.
Here's where three experts predict mortgage rates are heading: Around 6% or below by Q1 2025: "Rates hit 8% towards the end of last year, and right now we are seeing rates closer to 6.875%," says Haymore. "By the first quarter of 2025, mortgage rates could potentially fall below the 6% threshold, or maybe even lower."
The average 30-year fixed mortgage rate as of Thursday was 6.99%. By the final quarter of 2025, Fannie Mae expects that to slide to 6.0%.
As an economist, I don't expect rates below 5.5% before 2026. Here's why. Think back a couple of years. The average interest rates on homes went from about 3% in Q4 2021 to about 5.5% in Q2 2022.
If those projections remain and the Fed begins to lower its key rate, mortgage rates will presumably follow suit. Sunbury predicts the Fed will cut rates by between 100 to 125 basis points starting in May or June of 2024. “This would bring the policy rate to 4% to 4.25%,” Sunbury explains.
Housing Market Predictions 2025: Turning Point or Cooling Down? In 2025, the housing market is expected to start picking up again, with home prices rising by approximately 1% to 2% above the current inflation rate.
How high could mortgage rates go by 2025?
The average 30-year fixed mortgage rate as of Friday is 6.91%. By the final quarter of 2025, Fannie Mae expects that to slide to 6.0%.
According to their latest forecast for 30-year mortgage rates in October 2023, they expect them to range from 7.40% to 7.86%, with an average of 7.63%. They also predict that mortgage rates will peak at 9.41% in May 2024, before gradually declining to 3.67% by November 2027.
ING's interest rate predictions indicate 2024 rates starting at 4%, with subsequent cuts to 3.75% in the second quarter. Then, 3.5% in the third, and 3.25% in the final quarter of 2024. In 2025, ING predicts a further decline to 3%.
The average 30-year fixed rate reached an all-time record low of 2.65% in January 2021 before surging to 7.79% in October 2023, according to Freddie Mac.
Interest rates reached their highest point in modern history in October 1981 when they peaked at 18.63%, according to the Freddie Mac data. Fixed mortgage rates declined from there, but they finished the decade at around 10%.
Mortgage Interest Rate predictions for July 2026. Maximum interest rate 3.79%, minimum 3.57%. The average for the month 3.67%. The 15 Year Mortgage Rate forecast at the end of the month 3.68%.
Driving the news: The median Fed official now expects interest rates to be somewhat higher in 2025 and 2026 than they did in December — anticipating fewer rate cuts will be justified in the coming two years. The median projection for the longer-run rate also ticked up, to 2.6% from 2.5%.
In its most recent forecast, the Mortgage Bankers Association predicted that 30-year rates could drop to 6.4% by the end of this year, and that they may finally drop below 6% by the end of 2025.
What were the lowest mortgage rates in history? The lowest recorded rate for a 30-year fixed-rate mortgage was 2.65% in January 2021,This was likely due to the effects of COVID-19.
In 2025, the range of target rates was 2.50%-4.25%, on the low end, to 4.50%-5.75%, on the high end. The median 2025 fed funds rate projection was 3.9%, a 1.7-point fall from the 5.6% median fed funds target rate for year-end 2023.
Where will savings rates be in 2025?
The pace could pick up in 2025, experts say, with rates potentially falling into the 3% range for some of the best savings accounts. However, much depends on what happens with the economy.
When inflation is running high, the Fed raises those short-term rates to slow the economy and reduce pressure on prices. But higher interest rates make it more expensive for banks to borrow, so they raise their rates on consumer loans, including mortgages, to compensate.
Beyond the 35 percent of economists who expect rates to stay high through the end of 2026, 1 in 4 economists (24 percent) see rates holding above 2.5 percent until the end of 2025, while a smaller share (12 percent) see rates sticking at a restrictive level until the end of 2027 or later.
2025/2026 UK Interest Rate Predictions
Highest Projection for Q4 2025: The Bank of England predicts interest rates in 2025 will stabilise at 3.4%. Lowest Lowest Projection for Q4 2025: 30 Rates anticipates a significant drop to 1.75%. Highest Projection for 2026: Money To The Masses sees rates at 3.74%.
Last year, the White House projection for bill rates in 2030 was 2.4%. Such a level would be much higher than has been typical since the turn of the century. Three-month bill rates averaged around 1.5% over that period.
