One of the biggest questions right now is: when will mortgage rates finally decrease? After years of climbing rates and ongoing fluctuations in 2024, many are eagerly awaiting relief.
While no one can predict rates with complete certainty or pinpoint timing, experts provide valuable insights into what we might expect heading into next year. Here's what the latest forecasts suggest:
Mortgage Rates Expected To Stabilize in 2025
After a period of uncertainty and volatility, the most recent forecasts indicate that mortgage rates may begin to stabilize over the next year. Compared to current levels, they’re also projected to ease slightly. 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 Will Influence Mortgage Rates
The timing and pace of mortgage rate changes remain one of the housing market's toughest variables to forecast. These changes depend on multiple economic factors aligning. So, while rates may dip slightly, they’ll likely remain a moving target influenced by ongoing economic shifts.
Here are some of the key drivers that could impact rates:
- Inflation: If inflation cools, mortgage rates may decrease further. However, if inflation remains high or spikes again, rates are likely to stay elevated.
- Unemployment Rates: Employment levels significantly influence Federal Reserve decisions. While the Fed doesn’t set mortgage rates directly, their policies affect the broader economy, which can impact rate trends.
- Government Policies: Changes in fiscal and monetary policies, especially with a new administration taking office, could also influence financial markets and mortgage rates.
Remember, these projections are based on the best available data today. As new economic trends emerge, forecasts may change.
What You Can Do Right Now
Rather than trying to time the market, focus on what you can control. Here are a few steps to prepare for homeownership:
- Work on improving your credit score.
- Save extra cash for your down payment.
- Automate your savings to stay consistent.
These steps can strengthen your position and help you achieve your goals, no matter where rates land.
