Mortgage Interest Rates Forecast For 2025

While predicting the future is the domain of science fiction or fantasy, it’s not wrong to want to know where mortgage rates might be headed. This and other housing market predictions can make an impact on your decisions if you’re buying a new home or refinancing your current one. While no one can be certain, here’s a roundup of mortgage interest rates forecasts.

2025 Mortgage Interest Rate Predictions From The Experts

It’s likely that mortgage rates fall in the coming year. The Federal Reserve (Fed) has signaled more concern about the labor market as opposed to inflation. When attention turns to the labor side of the coin in the Federal Reserve’s dual mandate of maximum employment and stable prices, that often means lower rates to boost investment. Mortgage rates would benefit.

Let’s get into the forecasts from the experts and then dig into their reasoning. Each prediction assumes a 30-year fixed rate. It’s worth noting that the Freddie Mac “prediction” only covers through the end of 2024, but we can do some conjecture based on what’s included in their analysis:

• Freddie Mac: above 6%, but falling
• Fannie Mae: 5.9%
• National Association of Home Builders: 5.86%
• National Association of REALTORS^®: Several rate cuts in the coming year

Freddie Mac

Freddie Mac does as much interest rate tracking as anyone based on weekly surveys of mortgage lenders. But they’re pretty cautious in their forecasting, saying only that rates will remain above 6% through the end of this year. They do say that rates should fall, though. They also think that mortgage volume should go up a bit, and that typically happens when rates drop.

Fannie Mae

Fannie Mae predicts that interest rates will average 5.9% in 2025. Interestingly though, they break down their prediction by quarters as well. By the fourth quarter of next year, they see average rates being as low as 5.7%. Based on this, they see total mortgage origination volume across the industry increasing from $1.68 trillion to $2.155 trillion.

National Association Of Home Builders

The NAHB sees rates in 2025 averaging 5.86%. What’s kind of cool about the NAHB data is that it also forecasts treasury rates. There is a very high correlation between the 10-year treasury rate on any given day and the 30-year fixed mortgage. That rate is expected to be 3.53% in 2025, down from 4.12% this year.

National Association Of REALTORS^®

The NAR doesn’t give a specific prediction in terms of interest rates for 2025, but they do say in a presentation given this past July that the organization feels the Fed has room to lower the target for its benchmark federal funds rate six to eight times before getting to a neutral interest rate.

The Fed has already lowered the rate by 0.5% from where it was prior, double the rate of its usual move, so it’s possible you may think about lowering the top and bottom end of those estimates for the number of cuts. But because mortgages tend to at least move in the same direction as the federal funds rate, the trade group feels pretty good about rates falling.

2025 Mortgage Rate Predictions Vs. Past Rates

When industry analysts predict mortgage rates, they usually predict only the 30-year fixed rate, as the interest rates for every other term follow from that. The prediction we’ve inserted here comes from Fannie Mae. Historical data is taken from the Freddie Mac Primary Mortgage Market Survey^® based on the second week of each quarter.

How Do 2025 Mortgage Rate Forecasts Compare To Past Rates?

Fannie Mae’s prediction for the 30-year fixed rate in the first quarter of 2025 is 5.9%. Although not represented in the data above, the last time that rate showed up in Freddie Mac’s weekly survey was December 1, 2022. So that’s kind of where you can think about rates being in the near future if you believe the predictions.

The Federal Reserve’s projections for the federal funds rate show several more cuts over the next couple of years. This would tend to push mortgage rates down. Although not directly correlated, they follow the same direction. However, it’s likely unrealistic to think we would get down to the rates of 2020 – 2021 without a major economic shock. COVID-19 was the last one.