When Will Mortgage Rates Come Down?

When Will Mortgage Rates Come Down?

One of the biggest questions right now is: when will mortgage rates come down? After several years of rising rates and the fluctuations seen in 2024, many are eager for some relief.

While it’s impossible to predict rates or their timing with complete accuracy, experts provide insights into what we might expect in the coming year. Here’s what the latest forecasts suggest.

Mortgage Rates Are Expected To Ease and Stabilize in 2025

After a period of significant volatility and uncertainty, the latest forecasts suggest that mortgage rates will begin to stabilize over the next year and are expected to ease slightly compared to their current levels (see graph below):

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

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

Key Factors That’ll Impact the Future of Mortgage Rates

It’s important to understand that predicting the timing and pace of mortgage rate changes is one of the most difficult aspects of forecasting in the housing market. That’s because these predictions rely on several key factors aligning perfectly. While rates are expected to decrease slightly, they will remain a moving target. The ups and downs of ongoing economic factors are likely to continue. Here’s a look at a few of the elements that will influence their direction moving forward:

• 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.

Keep in mind, these forecasts are based on the best information available at the moment. As new economic data emerges, experts will adjust their projections accordingly. That’s why it’s important not to rely solely on these forecasts when deciding your next steps.

Instead, focus on the things you can control right now. Work on boosting your credit score, save any extra money for your down payment, and automate your savings to stay on track. These actions will help you achieve your homeownership goals more quickly.

Additionally, connect with a trusted real estate agent and lender to stay informed about the latest updates and gain expert insights on how they impact your plans.

Bottom Line

If you’re planning a move and want to stay updated on mortgage rate trends, let’s connect.