When Will Mortgage Rates Come Down?

When Will Mortgage Rates Come Down?

One of the top questions right now is: when will mortgage rates drop? After years of increases and fluctuations, we’re all hoping for relief. While exact predictions are impossible, experts provide valuable insights into what might happen in the coming year. Here's a look at the latest forecasts.

Mortgage Rates Are Expected To Ease and Stabilize in 2025

Recent forecasts indicate that after a period of uncertainty and volatility, mortgage rates are expected to stabilize over the next year. Experts also anticipate a slight easing from their current levels (see graph below):

As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

“While mortgage rates remain elevated, they are expected to stabilize.”

Key Factors That’ll Impact the Future of Mortgage Rates

Predicting the timing and pace of changes in mortgage rates is one of the toughest challenges in the housing market. This uncertainty stems from multiple key factors needing to align perfectly. While rates are anticipated to decrease slightly, they’re expected to remain a moving target influenced by ongoing economic fluctuations. Here are a few major factors shaping their direction:

• Inflation: If inflation cools, rates could dip a bit more. On the flip side, if inflation rises or remains stubbornly high, rates may stay elevated longer.
• Unemployment Rate: The unemployment rate also plays a significant role in upcoming decisions by the Federal Reserve (the Fed). And while the Fed doesn’t set mortgage rates, their actions do reflect what’s happening in the greater economy, which can have an impact.
• Government Policies: With the next administration set to take office in January, fiscal and monetary policies could also affect how financial markets respond and where rates go from here.

These forecasts reflect the most current data, but as new information emerges, experts may adjust their predictions. That’s why relying solely on these projections to time the market isn’t the best strategy. 

Instead, focus on what’s within your control. Strengthen your credit score, set aside extra funds for your down payment, and automate your savings. These steps will bring you closer to your homeownership goals. 

Stay connected with a trusted real estate agent and lender to stay informed about the latest updates and receive expert advice tailored to your plans.

Bottom Line

If you're planning a move and want to stay updated on mortgage rate trends, let's connect. Together, we can navigate the market and set you up for success.