Understanding the mortgage interest rates forecast for 2025 is crucial for anyone planning to buy a home, refinance, or invest in real estate this year. As we move through 2025, mortgage rates remain a central topic for homebuyers and sellers alike. This article explores the latest expert predictions, the key factors influencing mortgage interest rates, and what buyers can expect in the coming months.
Where Do Mortgage Interest Rates Stand in June 2025?
As of June 2025, the average 30-year fixed-rate mortgage hovers around 6.8% according to Freddie Mac data. Rates have remained elevated compared to the ultra-low levels seen in 2020 and 2021, largely due to persistent inflation and cautious monetary policy from the Federal Reserve.
Mortgage Interest Rates Forecast for 2025: What Experts Predict
U.S. Mortgage Rate Predictions
Most major housing authorities and economists expect mortgage interest rates to remain elevated but gradually decline through the second half of 2025:
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Fannie Mae: Projects 30-year fixed mortgage rates to end 2025 at 6.3%, with a slow descent into 2026.
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Wells Fargo: Predicts an average of 6.35% for Q2 2025.
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National Association of Realtors: Forecasts an average of 6.4% for 2025.
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Mortgage Bankers Association: Estimates rates could average as high as 7% in Q2, but most forecasts cluster around 6.5%–6.6%.
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General consensus: Rates will likely stay between 6.5% and 7.25% for much of 2025, with a possible gradual decline if the Federal Reserve implements its projected rate cuts.
Canadian Mortgage Rate Forecast
In Canada, mortgage rates are also expected to decrease gradually in 2025. The Big 6 Banks predict policy rates could fall to 2.25%–2.5% by the end of the year, with mortgage rates following suit. However, these cuts are expected to be slow and incremental, with most experts forecasting two to three 25-basis-point reductions throughout the year.
What’s Driving the 2025 Mortgage Interest Rates Forecast?
Federal Reserve and Central Bank Policy
The Federal Reserve’s decision in June 2025 to keep the federal funds rate steady at 4.25%–4.5% has kept borrowing costs high for now. However, the Fed’s projections still include two possible quarter-point cuts by year-end, depending on inflation trends and economic data. If inflation cools as expected, these cuts could nudge mortgage rates lower in late 2025. In Canada, the Bank of Canada is also expected to continue its rate-cutting cycle, aiming to bring inflation back to its 2% target.
Inflation and Economic Growth
Persistent inflation has kept mortgage rates high in both the U.S. and Canada. If inflation continues to ease and economic growth remains steady, central banks may feel more comfortable lowering rates, which would support a gradual decline in mortgage interest rates.
Global Events and Market Volatility
Geopolitical tensions, tariffs, and global economic uncertainty continue to influence rate forecasts. For example, new tariffs could push inflation higher, causing central banks to delay or reduce rate cuts, which would keep mortgage rates elevated.
Will Mortgage Interest Rates Go Down in 2025?
Most experts agree that mortgage interest rates will not drop sharply in 2025. Instead, gradual, modest declines are expected—contingent on inflation cooling and no major economic shocks. If the Federal Reserve and Bank of Canada both follow through with their projected rate cuts, rates could end 2025 slightly lower than where they started, possibly in the 6.2%–6.4% range for U.S. 30-year fixed mortgages and slightly lower for Canadian borrowers.
Tips for Homebuyers Navigating 2025 Mortgage Rates
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Be prepared for volatility: Rates may fluctuate week to week based on economic data and central bank decisions.
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Lock your rate if you find a good deal: Mortgage rates reflect market expectations and can change quickly.
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Focus on affordability: With rates still above 6%, prioritize your monthly payment and budget over chasing the lowest possible rate.
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Consider refinancing later: If rates drop significantly in 2026, you may be able to refinance for a lower rate.
Frequently Asked Questions: Mortgage Interest Rates Forecast for 2025
Q: Will mortgage rates fall below 6% in 2025? A: Most forecasts suggest rates will remain above 6% for the rest of 2025, with a gradual decline possible if inflation eases and the Fed cuts rates.
Q: What could keep mortgage rates high this year? A: Persistent inflation, new tariffs, and strong economic growth could all delay rate cuts and keep mortgage rates elevated.
Q: Should I wait to buy a home until rates drop? A: Timing the market is difficult. If you find a home that fits your needs and budget, it may be wise to buy now and consider refinancing later if rates fall.
Conclusion
The mortgage interest rates forecast for 2025 points to a year of modest declines, but rates are expected to remain above 6% for most borrowers. Central bank decisions, inflation data, and global events will all play a role in shaping the market. Homebuyers should stay informed, act quickly when favorable rates appear, and focus on long-term affordability rather than waiting for dramatic rate drops.