Here’s what forecasters predict mortgage rates will be through 2025
A roundup of quarterly mortgage rate forecasts shows that most forecasters still expect mortgage rates to gradually decrease over the next 18 months.
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Economic forecasting has never been an easy task, and it becomes even more challenging when confronted with unprecedented economic events like COVID-19 lockdowns and unparalleled levels of government intervention, followed by a rapid cycle of interest rate hikes.
Look no further than recent mortgage rate forecasts. Last year marked the second year in a row, mortgage rate forecasters at large have missed—big time. That raises the question: Can we trust mortgage rate predictions at all right now?
ResiClub’s latest roundup of quarterly mortgage rate forecasts shows that most forecasters still expect mortgage rates to gradually decrease over the next 18 months. One reason is that as the Federal Reserve presumably begins to cut rates, the bond market is expected to become less volatile, leading to a slight decline in mortgage rates.
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%. Meanwhile, Wells Fargo’s model expects 5.8%, and the Mortgage Bankers Association estimates 5.5%.
ResiClub takes all forecasts with a grain of salt. But if those forecasts come to fruition, it would mean that housing affordability would still remain strained in 2024 and 2025.
‘The housing market is likely to continue to face the dual affordability constraints of high home prices and elevated interest rates in 2024,” wrote Doug Duncan, chief economist of Fannie Mae, in March. “Hotter-than-expected inflation data and strong payroll numbers are likely to apply more upward pressure to mortgage rates this year than we’d previously forecast, as markets continue to evolve their expectations of future monetary policy. Still, while we don’t expect a dramatic surge in the supply of homes for sale, we do anticipate an increase in the level of market transactions relative to 2023—even if mortgage rates remain elevated.”
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