A common question everyone is asking right now is: when will mortgage rates start to come down? After a period of rising rates and significant fluctuations in 2024, we’re all hoping for some relief.

While no one can predict mortgage rates with absolute certainty or pinpoint exactly when they’ll drop, experts are offering insights on what we might expect in the year ahead. Here’s what the latest projections are saying.

Mortgage Rates Are Expected to Ease and Stabilize in 2025
After a period of volatility, the latest forecasts indicate that mortgage rates should start to stabilize over the next year, with a slight decrease compared to where they are now.

As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), notes:
“While mortgage rates remain elevated, they are expected to stabilize.”

Key Factors Affecting Mortgage Rate Movements
It’s important to recognize that predicting when and how mortgage rates will change is one of the most difficult aspects of the housing market. These forecasts depend on several key economic factors, so while rates are expected to ease, they may still fluctuate. Here are some key factors influencing future mortgage rates:

• Inflation: If inflation continues to subside, mortgage rates could decrease a bit more. However, if inflation remains persistent, rates may stay higher for longer.
• Unemployment Rate: The unemployment rate is another critical factor in Federal Reserve decisions. While the Fed doesn’t directly control mortgage rates, their actions reflect broader economic conditions, which can influence rates.
• Government Policies: As the new administration takes office in January, fiscal and monetary policies may impact the overall financial landscape, potentially affecting mortgage rates.

It’s crucial to remember that these forecasts are based on current data. As new economic trends emerge, experts may adjust their predictions. So, rather than trying to time the market, it’s wise to focus on what you can control.

Start by improving your credit score, saving for a larger down payment, and automating your savings. These steps will put you in a stronger position when you’re ready to buy a home.

And be sure to reach out to a trusted agent and lender, so you always have the most up-to-date information—and expert guidance on how these changes could impact your plans.

Bottom Line
If you’re looking to buy a home and want to stay on top of where mortgage rates are headed, let’s connect.