Mortgage Rate Forecasts for 2025: Where Do They Go From Here?

It’s that time of year when I look at what next year might hold for mortgage rates.

It’s never easy to accurately predict mortgage rates, and last year was no exception.

30-year fixed rates have ranged from a low of 6.08% in September to 7.22% in May, which interestingly is not far from last year’s levels today.

For reference, it ended 2023 at 6.61%, according to Freddie Mac data, and averaged 6.60% last week.

So what will 2025 look like? Well, that’s anyone’s guess. But let’s take a look at some popular forecasts (including my own) to try to make some informed predictions.

Forecasts predict mortgage rates will improve, but remain high in 2025

First, let’s start with the general consensus, which is fairly positive on mortgage rates in 2025.

As with last year, most industry experts and economists expect mortgage rates to decline in 2025, but remain high compared to levels seen in 2022 and earlier.

The reason is primarily due to the increase in government spending and continued inflation. This means that the government may need to issue more debt via Treasuries, with the increased supply hurting bond prices.

Meanwhile, if inflation rises again, bonds will suffer that way too. Of course, this all depends on what actually happens under the new administration.

I’m not entirely convinced that mortgage interest rates will rise during Trump’s second term, even though they initially rose during his first term.

One of the main reasons behind this is that they have already jumped about 100 basis points (1.00%) since September when it looked like it was the favorite.

So his potentially inflationary policies, such as broad tariffs and tax cuts, have already been implemented. If reality defies expectations, interest rates have room to move lower.

It could also decline if unemployment rates continue to rise, as that has been the Fed’s main concern, not inflation.

Anyway, let’s check out some estimates and go from there.

MBA 2024 Mortgage Rate Forecast

First quarter 2025: 6.6%
Second quarter 2025: 6.5%
Third quarter 2025: 6.4%
Q4 2025: 6.4%

As always, I’m compiling a roundup of forecasts from leading economists and housing groups.

I always like to check how they performed the previous year as well, although there is no indication of performance for next year.

First we have the Mortgage Bankers Association (Master of Business Administration), which last year forecast a range of 6.1% to 7%.

They actually predicted 30-year interest rates would fall to around 6.10% in the fourth quarter of this year, and they probably would have been right if rates hadn’t jumped after the election.

In 2025, they will play very conservatively, with a very narrow range of 6.4% to 6.6%. In other words, only 20 basis points of movement.

This may seem too narrow to be taken seriously, but anything is possible. Mortgage rates are very close to levels last seen in 2001.

During that year, 30-year fixed interest rates ranged from 6.62% to 7.16%. So it’s not out of the question.

But mortgage rates have recently shown greater volatility and seen a much wider range.

The upside to this forecast is that greater stability could lead to some compression in mortgage interest rate spreads, which could provide some relief.

Currently, mortgage spreads are still around 100 basis points above their long-term average, meaning MBS bond investors are demanding a premium versus government bonds.

Fannie Mae Mortgage Rate Forecast for 2024

First quarter 2025: 6.6%
Second quarter 2025: 6.4%
Q3 2025: 6.3%
Q4 2025: 6.2%

Now let’s take a look at Fannie Mae’s mortgage rate Climate predictionwhich along with Freddie Mac buys mortgages from lenders and bundles them into MBS.

Last year, they expected the 30-year fixed yield to range from 6.5% to 7%, and to end the year at 6.5%.

Not very far, but it actually turns out to be very conservative. This year, they are a bit more optimistic, anticipating a slow decline towards 6.2%.

It seems to be a pretty safe forecast, although they update it every month and I’m using their most recent forecast dated December 11th.

They seem somewhat optimistic, but not optimistic enough to put 5 on the board. They also expect a slow improvement over time like MBA.

We know that mortgage rates rarely move in a straight line up or down, so expect the usual twists and turns along the way.

Freddie Mac 2025 Mortgage Rate Forecast

Q1 2025: Not available
Q2 2025: Not available
Q3 2025: Not available
Q4 2025: Not available

Next up is Freddie Mac, which two years ago stopped providing mortgage rate forecasts.

They are the primary source of mortgage rate data through the Weekly Primary Mortgage Market Survey (PMMS).

Unfortunately, it no longer provides monthly forecasts or forecasts for the coming year.

However, they provide Monthly forecasts So we can collect a little information there.

Their latest release notes the recent fluctuations in mortgage rates, but says: “As we enter 2025, we expect rates to gradually decline over the course of the year.”

So this is a good sign, and in line with the other predictions mentioned above.

They believe that lower mortgage rates in 2025 should also reduce some of the impact of mortgage rate stabilization experienced by current homeowners, freeing up more for-sale inventory in the housing market.

In turn, these lower rates should boost inventory and lead to an uptick in home sales next year.

Despite the increase in inventory, they still expect home prices to continue to rise, albeit at a “slower pace.”

Finally, they expect total residential loan volume to rise “modestly in 2025” thanks to more purchase loans and increased refinancing requests associated with lower interest rates.

Many current homeowners will benefit from the refinancing rate and term if rates can return to the low 6% range. Millions more are likely to refinance if interest rates fall to the mid-five years.

NAR 2025 Mortgage Rate Forecast

First quarter 2025: 6.0%
Second quarter 2025: 5.9%
Q3 2025: 5.8%
Q4 2025: 5.8%

Now let’s take a look at the always entertaining forecasts from the National Association of Realtors (NAR), which are released monthly US economic forecasts.

This report contains their forecast for next year’s mortgage rates, although the most recent report I can track down is from October.

But I also encountered A Presentation By Lawrence Yun, NAR’s chief economist, who simply said mortgage rates would be “close to 6%” for both 2025 and 2026.

However, both forecasts are very bullish as always. Estate agents rarely expect interest rates to rise and often expect an improvement in the coming year.

So this is no different from previous years. They expect the 30-year fixed rate to fall lower and lower and even below 6%.

Last year, they expected interest rates to range from 7.5% in the first quarter to 6.3% by now. It turns out that’s not too far off.

Wells Fargo Mortgage Rate Forecast for 2025

First quarter 2025: 6.65%
Second quarter 2025: 6.45%
Third quarter 2025: 6.25%
Fourth quarter 2025: 6.30%

Wells Fargo Bank, the former largest mortgage lender, also issued a US economic forecasts With all types of estimates for both 2025 and 2026.

They’re also on pace to mirror those of Fannie Mae and MBA, which are average to low.

What’s interesting about their forecast is that 30-year fixed rates bottom out in the third quarter of 2025 before rising in the fourth quarter.

Then we go up a little bit in 2026. So, according to them, 2025 could be as good as it gets for a while.

To be sure, it all depends on the path of the 10-year yield, which they also see bottoming out in the third quarter of 2025.

Forecasts from Zillow, Redfin, Realtor, and the rest

There are a lot of expectations and I want to keep this article fairly brief, so let’s discuss a few more of them before I share my own article.

Zillow has it He said It expects mortgage rates to decline, but they remain volatile. In other words, they will likely improve in 2025, but will face typical ups and downs.

They rightly point out that this volatility will provide both risks and opportunities, so be vigilant.

Redfin is very pessimistic, Saying Mortgage rates will likely start and end 2025 at around 7%, with an average of around 6.8%.

They are counting on Trump’s tariffs and tax cuts and continued economic strength. But they put forward an alternative theory in which interest rates would fall to as low as $6 if those expected scenarios do not unfold.

in realtorowned by News Corp. Licensed by NAR, they expect a lower average of 6.3% in 2025, with the year ending at around 6.2%.

They also revised their mortgage rate forecasts upward to reflect increased government spending, higher prices/inflation due to tariffs and lower taxes under the Trump administration and a Republican-led Congress.

But like others, they are not sure whether it will actually come to fruition or not, because rhetoric, words, proposals and reality are completely different things.

The National Association of Home Builders (NAHB) also weighed in with its monthly report Macroeconomic forecasts.

They expect the 30-year bond rate to fall to 6.36% in 2025 from 6.73% in 2024, an improvement of 40 basis points.

Mortgage rates are top of mind for builders who have gained a lot of market share recently as current supply suffers from mortgage rate fixation.

Their price buyouts have made the deals less obvious over the past few years, but they come with a hefty price tag for the builder.

Finally, the early American economists expected Mortgage rates will fall between 6% and 6.5% during 2025.

Real Mortgage Rate Forecast for 2025

First quarter 2025: 6.5%
Second quarter 2025: 6.75%
Third quarter 2025: 6.25%
Fourth quarter 2025: 5.875%

Well, now it’s my turn. I know mortgage rate forecasts are for the birds, but it’s still worth asking.

Last year I was very optimistic and predicted a 30-year fixed rate of 6.25% in Q3 and 5.875% in Q4 2024.

I was mostly right about the third quarter, but I failed to take the presidential election into account, which invalidated my forecast for the fourth quarter.

However, I take responsibility, and unlike other forecasters, I will make adjustments going forward so that my forecasts are less linear throughout the year.

In other words, it’s not just less and less as the year progresses. This is clearly wrong.

However, I expect an average rate of 6.5% in the first quarter as the recent rise in interest rates does not appear justified. So a simple relief gathering in the new year.

Then there is an uptick in the second quarter as mortgage rates always seem to be at their highest in the spring, when homebuyers need them most.

But it only worsened by about a quarter of a percent before falling again in the third quarter due to economic weakness and increased unemployment.

The index finally fell below 6% in the fourth quarter, but just below 6%.

The basic premise for me is that I see a weak economy and I don’t think all of Trump’s policies will pay off, which arguably have already translated into higher interest rates.

For the record, I wouldn’t be surprised to see rates hit the top 5 during certain weeks during other seasons as well.

As always, there will be plenty of opportunities for both homebuyers and current homeowners looking to refinance. Just keep your eye on the ball!

Read on: How are mortgage rates determined?