Up or Down? Interest Rate Forecast for 2025

As 2024 draws to a close, it’s time to turn our attention to the new year. And with that, there’s a massive question hanging over everyone’s head:

Which direction are mortgage rates headed?

Let’s start with this. There are a variety of factors—which we discuss below—that could (and probably will) impact where rates end up in 2025. 

However, that’s not stopping the experts from making forecasts. In this article, we take a look at some of these predictions while also hearing from House Buyers of America CEO Nick Ron.

What the Experts are Saying

Before we start, let’s reiterate that no one knows what the future holds for mortgage rates. So, you should never make a homebuying decision based on predictions. Instead, lean on your own experience and circumstances to make an informed and confident decision.

Now, it’s time for the experts to chime in (courtesy of U.S. News & World Report).

In addition to the above, The Mortgage Reports spoke with several experts to gain their insights. 

Nadia Evangelou, senior economist and director of real estate research, National Association of REALTORS: “In 2025, the 30-year fixed mortgage rate is likely to average around 6%.”

Selma Hepp, chief economist for CoreLogic: “We expect mortgage rates to average about 6.6% in 2025, ending at about 6.35% at the end of next year.”

Jason Gelios, Realtor, Community Choice Realty: “Going into 2025, I foresee mortgage rates hovering around 6% for your standard 30-year, fixed-rate mortgage. I predict the 15-year mortgage rate will average at 5.75% through the majority of 2025.”

Rose Krieger, senior home loan specialist, Churchill Mortgage: “I hope mortgage rates will follow the current trend and possibly drop into the high 5% range. Average 15-year mortgage rates could stay similar to the 30-year rates, as they have been recently.”

Rick Sharga, president/CEO of CJ Patrick Company: “It seems likely that 30-year fixed mortgage rates will begin 2025 right around 7.0%, and decline slightly slowly and unevenly over the rest of the year—up slightly some months, down in others. Mortgage rates could come down by a full point by the end of the year, ending around 6.0%. Rates on 15-year mortgages will probably follow the same up-one-month, down-the-next pattern as 30-year mortgages, ending 2025 slightly lower, between 5.0% and 5.25%.”

Albert Lord III, founder/CEO, Lexerd Capital Management LLC: “The 30-year fixed mortgage rate is projected to average approximately 6.0% across 2025. Meanwhile, the 15-year fixed mortgage rate is projected to average 5.6% across 2025.”

Richard Staniszewski, CEO, Hera Title: “The general consensus for the 30-year fixed mortgage rate is a moderated downward trend, beginning the year at the 7% percent mark and moving to a baseline of 6.1% by the third quarter of 2025. We should see the 15-year mortgage open 2025 right around the 6.1% mark and ultimately wind up somewhere in the neighborhood of 5.25% by the end of the year.”

Dennis Shirshikov, adjunct professor of economics at the City University of New York: “I project the 30-year fixed mortgage rate will average 6.75% across 2025. The 15-year fixed mortgage rate is likely to average around 6.0% for 2025.”

House Buyers of America CEO Nick Ron Speaks

With the above in mind, let’s now turn our attention to the thoughts of House Buyers of America CEO Nick Ron.

He predicts a mortgage interest rate range of 5.75% to 6% in 2025, backed by these beliefs:

• Inflation challenges persist: While inflation has shown signs of moderating, it remains far from the Federal Reserve’s 2% target. This lingering gap is likely to maintain upward pressure on interest rates.
• Tariffs and inflationary pressure: Donald Trump has promised to reinstate tariffs on imported goods, which could drive inflation higher, keeping rates from declining significantly.
• No hard drop in inflation likely: Unless a major economic shock such as a significant labor market downturn or geopolitical conflict occurs, Ron believes inflation will likely decline gradually, not rapidly.

Breaking the 6% Barrier

Ron also points to the psychological impact of mortgage rates dipping below 6%. “Once rates fall below 6%, it’s going to hit a psychological threshold for many potential buyers who have been sitting out the market,” Ron notes. 

This could lead to a surge in buying activity, creating new demand-side pressure that could stabilize or even halt further rate declines.

The increased buying activity could inject renewed momentum into the housing market, but it also carries the risk of reigniting inflationary pressures. If demand outpaces supply, price increases could ripple across the economy, potentially undoing the progress made on interest rate reductions.

What Could Drive Rates Lower?

While Ron leans toward cautious optimism, he also acknowledges scenarios where rates might decline more significantly than expected:

• Improved Trade Policies: If Trump secures favorable trade deals that lower tariffs, it could alleviate some inflationary pressure. Reduced import costs could have a ripple effect, lowering consumer prices and aiding interest rate declines.
• Expanded Energy Production: Increased domestic energy production could drive down energy costs, a major component of inflation. If energy prices fall, overall inflation may follow suit, opening the door for the Federal Reserve to ease monetary policy more aggressively.

Balancing Caution with Opportunity

Ultimately, Ron’s forecast is rooted in realism. He stresses that while conditions could improve under certain circumstances, potential homebuyers should focus on their individual situations rather than market speculation.

“Don’t wait for the ‘perfect’ rate,” Ron advises. “If you find a home that meets your needs and fits your budget, it’s often better to make a move than to keep waiting for the market to change.”

This balanced approach reflects the complexity of predicting mortgage rates. While the range of 5.75% to 6% offers some optimism, factors like inflation, tariffs, and consumer psychology remain wild cards in shaping the 2025 housing market.

As we move into the new year, all eyes will be on the Federal Reserve, inflation data, and global economic developments to see which path interest rates ultimately take.

Ron said it best in a few words:

“Marry the property, but date the rate.”

In other words, If you find a good deal, lock it in. The price is what you want to focus on; that doesn’t change. The rate may be high, but if rates go down in the future, you can always refinance. You’re not locked into a rate permanently.

Final Thoughts

Predicting mortgage rates is an inexact science, influenced by countless economic, political, and social factors. 

While expert forecasts provide a glimpse into possible trends, they’re far from guarantees. The reality is that the best decision for your circumstances often depends more on your personal financial situation, housing needs, and long-term goals than on market speculation.

If you’re in the market for a home, focus on what you can control—your budget, credit score, and readiness to buy. Rates may fluctuate, but finding the right home that fits your lifestyle is always a worthwhile investment.