If you’re waiting for mortgage interest rates to fall before buying a home, you might need to be more patient. According to a recent Reuters survey, mortgage rates are expected to remain higher.
📈 Where Are Rates Headed?
The survey forecasts the average 30-year fixed mortgage rate will decrease slightly from 6.98% to approximately 6.73% by the end of 2025. While that’s a small improvement, it’s still higher than many experts had hoped earlier this year. Looking ahead, mortgage rates may further decline to 6.33% in 2026 and 6.29% in 2027, though these projections are not guaranteed.
This 2025 mortgage rate forecast is slightly more conservative than Fannie Mae's prediction that rates could fall to 6.2% by year-end 2025 and 6.0% by 2026.
🤔 Why Mortgage Rates Aren't Dropping Faster in 2025
Mortgage interest rates are influenced by various factors, including inflation, trade policies, and global economic events. Odeta Kushi, Deputy Chief Economist at First American, explained that if inflation calms down and the Federal Reserve becomes more supportive, we could see mortgage rates closer to 6% later this year - but it all depends on how the economy performs.
🏠 What About Home Prices?
There’s some good news here: home prices are projected to increase at a slower pace over the next few years. Prices are projected to increase by 3.5% through 2027, which would be the slowest pace since 2011.
A Shift in Buyer Behavior
Redfin CEO Glenn Kelman observed that buyers are beginning to resist rising home prices. He expects home prices to dip at least 1% in late 2025, and with wage growth around 4%, that could help more buyers finally afford a home.
However, many people are still hesitant because of ongoing worries about the economy. In fact, 1 in 4 Americans say they’re delaying major purchases like cars or homes because of financial uncertainty.
Struggles in New Home Construction
New home construction continues to face significant challenges. Government data showed that construction spending fell for two months in a row - partly due to tariffs making materials more expensive. Most experts surveyed by Reuters believe fewer new homes will be built this year, adding pressure to the already tight housing market.
What This Means for First-Time Buyers
Unfortunately, the market outlook for first-time homebuyers has weakened. Back in February, 62% of experts thought affordability would improve this year. Now, only 12 out of 24 still believe that’s possible. That’s a big drop in confidence and a sign that first-time buyers may need more support and creative financing options.
How Loan Factory Can Help
Although mortgage rates may remain elevated, achieving your homeownership goals is still possible. At Loan Factory, we offer:
Low down payment options
Rate comparison tools to find a competitive mortgage deal
AskMoSo, our smart AI tool that answers your mortgage questions 24/7
Whether you’re a first-time homebuyer or considering refinancing, Loan Factory is here to guide you through every step of the mortgage process. Get your free mortgage rate quote today at 714-444-9999 or compare 2025 mortgage rates at LoanFactory.com.
