Here are a few mortgage rate predictions after years of high rates – get more informed about nationwide trends in this guide.
Data from a March 2025 U.S. News survey reveals that 4 out of 5 aspiring homebuyers are holding off on purchasing a home in hopes that mortgage rates will drop. And expectations are high — 25% of survey respondents said they won’t start house hunting until mortgage interest rates fall below 5%.
But for now, the real estate market isn’t cooperating, and mortgage rates remain stubbornly high.
To understand the current reality: The average interest rate on a 30-year fixed mortgage — the most common home loan in the U.S. — has risen from a historic low of 2.65% in January 2021 to a range between 6.08%–7.04% so far this year. As of late May 2025, the average sits at 6.98%.
If you’re among those waiting for a dramatic decline in borrowing costs in 2025 before shopping for a home, housing economists say don’t count on it.
The experts generally agree that mortgage rates are unlikely to fall sharply anytime soon, with most forecasting interest rates will remain elevated throughout 2025 and into 2026, hovering in the mid-to-upper 6% range.
Here’s what some of them are saying about where rates are headed:
- “People are just going to have to get used to, if not 7% rates, then 6% rates,” said Daryl Fairweather, Chief Economist at Redfin.
- Danielle Hale, Chief Economist at Realtor.com, echoed a similar outlook: “There are many unknowns on the horizon that outweigh what we know from current data, and likely even the Fed’s perspective on what we know. As a result, mortgage rates are likely to remain in the high-6% range they’ve held for the last six-plus months.”
- Eric Lynch, an economist with the National Association of Home Builders (NAHB), noted: “As of April 10, the current Freddie Mac 30-year fixed-rate mortgage sits at 6.62%. While it will not be smooth, we anticipate the 30-year mortgage rate to average around this level by the end of 2025 and fall just above 6% by late 2026.”
- Lawrence Yun, Chief Economist at the National Association of REALTORS®, cautioned that rates are unlikely to return to the historically low levels of the pandemic era: “Mortgage rates can go down with a Fed rate cut—if inflation is under control. But we won’t see 4% mortgage conditions again because the U.S. has a massive national debt, and rates can’t fall to 5% either.” He forecasts average rates of 6.4% in 2025 and 6.1% in 2026.
- And according to the Mortgage Bankers Association, “We predict the 30-year fixed-rate mortgage to average 7% in the second quarter of 2025, edge down to 6.8% in the third quarter, and finish the year at 6.7%”, a slight upward revision from earlier projections.
What Needs to Happen for Mortgage Interest Rates to Go Down?
Many projections indicate that mortgage rates won’t fall below their 2024 lows. According to Freddie Mac, the lowest average rate recorded that year was 6.08% in September.
So, what would it take for mortgage rates to drop far enough to restore affordability for the millions of Americans currently priced out of the housing market?
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Inflation Must Fall — and Stay Low
Inflation means prices go up while the value of money goes down, making it harder for you to afford everyday services and goods over time.
When inflation exceeds the Federal Reserve’s (Fed) 2% target, the central bank raises the federal funds rate to slow down the economy and cool off-price growth.
These rate hikes increase the cost of overnight borrowing between commercial banks, prompting them to increase interest rates on consumer products like credit cards, mortgages, and other loans to offset their higher expenses.
For example, mortgage rates surged in 2022 as the Fed raised rates aggressively to combat inflation, which peaked at 9.1%. The average 30-year fixed mortgage rate more than doubled, jumping from about 3% to 7%+ by the end of the year.
In contrast, when inflation begins to ease and shows signs of staying low, the Fed starts cutting interest rates.
By late 2024, inflation had fallen below 3%, and the Fed responded with three rate reductions. Still, as of May 7, 2025, the central bank has held the federal funds rate steady at between 4.25% and 4.5%, waiting for stronger signs that inflation will continue to slow.
If the downward trend continues, the Fed could gain enough confidence to issue further rate cuts.
That would likely pull mortgage rates lower, creating a long-awaited opening for home buyers who’ve been holding back in today’s expensive market.
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Slower Economic Growth
While a strong economy is desirable — boosting wages, job growth, and consumer spending — it can also keep mortgage rates elevated.
When economic growth slows or recession risks rise, investors tend to move their money into safer assets such as U.S. Treasury bonds and mortgage-backed securities. This heightened demand pushes bond yields down, which usually drives mortgage rates lower as well.
Mortgage rates are also sensitive to economic news and geopolitical developments. For instance, newly announced tariffs from the Trump administration have added uncertainty to the financial markets.
Depending on how inflation and global supply chains react, these tariffs could either increase inflation — leading to higher rates — or drag the economy down, potentially triggering earlier-than-expected mortgage interest rate cuts.
Should You Buy a Home Now, or Wait for Mortgage Rates to Drop?
Trying to time the housing market to secure the “perfect” mortgage interest rate is risky, given the many variables at play, including inflation trends, Fed policy, economic performance, investor behavior, and unexpected geopolitical shifts.
If you’re financially prepared and have found a home you love that fits your budget, many financial and real estate experts suggest it may be wiser to buy now rather than gamble on uncertain rate movements. In fact, higher interest rates come with certain strategic advantages for buyers, such as less competition and more negotiating power, that are often overlooked.
To understand why this might still be a smart time to buy, check out our post: “What Happens to Home Prices When Interest Rates Rise?”
Can’t Sell Your Pittsburgh Home Due to High Rates? We’re Still Buying—Quickly and Fairly
It’s no secret that high mortgage interest rates have slowed the real estate market nationwide. Many traditional buyers are sitting on the sidelines, unable to qualify for loans or hesitant to take on higher monthly payments.
If you’re trying to sell, that could mean longer wait times, price reductions, and deals falling through at the last minute.
But there’s another way forward, and it doesn’t require waiting for rates to drop.
With more than a decade of experience and 750+ homes purchased and sold, HomeBuyers of Pittsburgh pays cash for homes in any condition—no contingencies, appraisals, repairs, or mortgage financing headaches. A simple 20–30 minute property assessment is all it takes to receive your no-obligation cash offer. Call us today at 412-267-0827 or email info [at] urbanpgh.com to set it up.
If you like the fair market value offer, you choose the closing date, which can be in as little as 21 days.
While interest rates may be high, your home sale doesn’t have to stall. Let HomeBuyers of Pittsburgh help you move forward — quickly, fairly, and stress-free — no matter what the mortgage interest rates decide to do next!
