As 2023 kicks off after a year that saw mortgage rates dramatically spike up to dizzying new highs of over 7%, homebuyers, and existing homeowners are understandably asking – what are 2025 mortgage rate predictions? We asked financial analysts and economists to gaze into their crystal balls.
Views on rates in the next couple of years are mixed, though most experts believe the hardest hits have already occurred in mid-2022 and don’t expect a return to the ultra-low rates under 3% seen during the pandemic. Much depends on how high the Fed boosts its federal funds rate to combat stubborn inflation and whether the US economy slides into a recession.
Key mortgage rate projections for 2025:
- 30-year fixed-rate average between 5% to 5.5%
- Adjustable rate mortgages averaging 4% to 4.5%
- Chance rates rise back up over 6% if high inflation persists
- Possibility rates fall just under 5% if soft recession occurs
Odeta Kushi, Deputy Chief Economist at First American, projects 30-year rates landing at 5.4% by the end of 2025 if inflation drops near the Fed’s target 2% level. Meanwhile, Nationwide’s Chief Economist David Berson forecasted rates in the upper 4% range for 2025, factoring in his expected moderation of inflation.
Large uncertainties remain, making most experts hesitant to pin down an exact rate. But take heart that the worst pain is likely over, and some measure of stability is predicted by 2025 based on various economic scenarios. This offers homebuyers hope for budgeting home loans.
In another related article, Projected Interest Rates in 5 Years: Detailed Forecast and Analysis for 2025