--- title: Will Mortgage Rates Finally Go Down in 2025? description: While mortgage rates are expected to decrease in the new year, anyone expecting a massive drop is likely to be disappointed. Here's why. authors: - name: Leslie Cook role: Editor, Real Estate url: https://money.com/author/leslie-cook/ bio: Leslie Cook is Money’s lead real estate editor covering trends in the housing market, mortgage rates and real estate. She also writes about home renovation trends and tips. education: Bryn Mawr College, BA History certifications: Certified Personal Finance Counselor at_money_since: 2019 articles: 798 covers: - Mortgages - Banking - Credit - Economy and Politics - Housing - Identity Theft - Insurance - Loans - Personal Finance - Professional Services - Retirement - Taxes social: - https://twitter.com/LeslieLCook - https://www.linkedin.com/in/leslie-cook-9829b9198/ editors: - name: Julia Glum role: Managing Editor url: https://money.com/author/julia-glum/ bio: Julia Glum joined Money in 2018 and specializes in covering financial trends that affect everyday Americans' wallets. She also writes Dollar Scholar, a weekly newsletter that teaches young adults how to navigate the messy world of money. education: University of Florida at_money_since: 2018 articles: 453 covers: - Mortgages - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Personal Finance - Professional Services - Retirement - Shopping - Taxes - Technology also_seen_in: - Newsweek - International Business Times - CBS News - Good Morning America - WUSA9 - Pix 11 - The New York Times - Mashable - The Washington Post - CNBC - Politico social: - https://x.com/superjulia - https://www.linkedin.com/in/julia-glum published: '2024-12-17T13:50:54.000Z' modified: '2024-12-17T14:46:06.000Z' section: Mortgages tags: - News word_count: 720 canonical: https://money.com/mortgage-rates-predictions-2025/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We may earn a fee if you click on the links below. Compensation does not determine ranking. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![House walking away with a line behind it](https://img.money.com/2024/12/News-Housing-Market-Predictions-2025.jpg) Will 2025 be the year mortgage rates finally go — and stay — down? According to most housing market analysts, anxious homebuyers waiting for improved affordability will likely get a respite in the new year. But while mortgage rates are expected to decrease, anyone expecting a massive drop is likely to be disappointed. All major industry players, including the National Association of Realtors, Zillow, Realtor.com and Redfin, agree that mortgage rates should move lower next year. Just how much lower is up for debate. NAR and Realtor.com expect rates to average between 6.2% and 6.4% by the end of 2025. Zillow believes rates will stay within a tight range between 6.5% and 7%, and Redfin anticipates rates will average 6.8%. Mortgage rate decreases will likely be slow and bumpy in a repeat of this year’s rate movement. In 2024, Freddie Mac’s benchmark rate for a 30-year fixed-rate loan increased to 7.22% in May and dropped to a low of 6.08% in September before heading higher again. [Current rates](https://money.com/current-mortgage-rates/) are hovering close to 7%. This see-saw pattern will probably continue next year. Alas, for prospective buyers hoping for greater affordability, a gradual improvement in mortgage rates could be frustrating. It’s obvious that the high cost of financing has put a damper on the housing market over the past two years: In a recent [survey](https://www.opendoor.com/articles/housing-market-mood-2024) by online real estate company Opendoor, more than 50% of respondents cited mortgage rates as the biggest obstacle to housing affordability heading into next year. Lower mortgage rates can increase a homebuyer’s ability to finance a home purchase. In fact, record-low mortgage rates during the early pandemic years created a boom: Buyers could afford larger and higher-priced homes because the mortgage payments were so affordable. According to NAR data, the average monthly mortgage payment for May 2021, for example, was $1,067 on a $400,000 home (assuming a 20% down payment). At a 6.69% rate, the payment on that same loan would be $2,063. ## What will influence mortgage rates in 2025? Scott Bridges, chief consumer direct lending production officer at mortgage lender Pennymac, points out that it’s difficult to predict mortgage rate movement. Even under the best circumstances, he says, many forecasts “turn out wrong.” Looking to 2025, the incoming presidential administration is set to implement new policies that will affect the U.S. economy and housing, making it especially “hard to predict what’s going to happen,” says Bridges. Searching for clues? Many prospective buyers may focus on the [Federal Reserve](https://money.com/fed-rate-cut-prediction-december-2024/) and whether it cuts short-term interest rates this month (and into the new year) as the primary factor influencing mortgage rates moving forward. But the reality is that the central bank’s decisions have [no direct impact](https://money.com/mortage-rates-not-going-down-fed/) on long-term interest rates like mortgage rates. Instead, says Leo Pareja, CEO of eXp Realty, the rate for a 30-year home loan is more closely tied to the movement of the 10-year Treasury note than the actions of the Fed. Treasuries, in turn, are directly influenced by current economic conditions. Treasuries are debt instruments the federal government sells to investors to finance its debt. When the U.S. economy is strong, such as when inflation is low and employment is high, investors typically prefer to invest in the stock market because returns are higher. To attract buyers during these times, the government has to increase the yields offered on Treasuries. Because home loans are typically held for 10 years, their rates are tied to the 10-year yields: If yields rise, so do mortgage rates. While domestic economic factors will play a significant role in rate movement, some outliers could also derail their path. Pareja points to the war between Russia and Ukraine and the recent unrest in the Middle East as factors that “could affect consumer sentiment, as well as the correlation between the 10-year Treasury and the actual 30-year fixed rate.” Global conflicts expanding to a larger area could, for example, impact the supply of essential commodities like grain and oil, leading to higher inflation and eventually higher interest rates, including those on home loans. In other words, the current outlook for 2025 is relatively positive — but could turn bleak at any moment. ## Buy your new home with more convenience and less hassle ### A Mortgage Expert at Rocket Mortgage (NMLS #3030) can lend you a hand for a smoother process. Your dream home is possible. Click below to make it happen. [View Rates](https://money.com/pr/u918d32af718?ap_referrer=%2Fmortgage-rates-predictions-2025%2F) ![](https://s3.consumersadvocate.org/prd/image/image/26681/medium_57f09f10-efb8-487d-a73e-5f7d605144eb.png) Imagine finally owning your dream home — Rocket Mortgage (NMLS #3030) can help! 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