We’re just a few weeks into the new year, but we are already seeing mixed signals in the U.S. economy. Inflation has cooled from its 2023 peak, but at 2.7%, today’s rate is still above the Federal Reserve’s 2% target. Meanwhile, interest rates are still high, and for homebuyers, this means mortgage rates between 6% and 7% — forcing many to put their plans on hold until borrowing becomes more affordable.
With the Federal Reserve now hinting at a few rate cuts this year, you may wonder whether mortgage rates will finally drop below 6%. We spoke with industry experts to understand what you should expect — and what factors to watch — as you plan your next move.
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Will mortgage rates fall below 6% in 2025? What experts say
Some mortgage professionals see the potential for a gradual decline in mortgage rates this year, while others warn that current rates might be here to stay.
Chris Heller, president of Movoto.com, believes a drop below 6% is possible, though he emphasizes it won’t happen overnight. On the other hand, Tomo Mortgage’s senior vice president and chief market analyst, Emanuel Santa-Donato, suggests historical patterns make it unlikely for mortgage rates to fall below 6% at any point this year.
Other forecasts land somewhere in the middle.
“While I’d love to say rates will drop below 6% in 2025, I think it’s a moderate probability and not a certainty,” says Steven Parangi, a licensed mortgage loan originator and owner of Alpine Mortgage Services. His view aligns with the Mortgage Bankers Association’s prediction that rates will stay between 6% and 7% throughout the year.
Before you make any homebuying decisions, let’s look at what might drive rates down toward that 6% threshold – and what could keep them at current levels or even push them higher.
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What could make mortgage rates drop back to 6% this year?
“For rates to fall below 6%, inflation would need to show sustained moderation, prompting the Federal Reserve to ease monetary policy,” says Heller.
It may help to monitor the Consumer Price Index (CPI), as several months of lower numbers can signal prices are finally cooling.
A slowing economy could also push mortgage rates lower, but Parangi warns this isn’t guaranteed.
“A mild recession would push rates down as the Fed tries to stimulate growth,” Parangi says. “But it isn’t always good for mortgage rates if it brings market instability or more inflation.”
Even if conditions improve, experts say you shouldn’t expect dramatic changes.
“The U.S. economy has proven resilient despite restrictive monetary policy,” says Santa-Donato.
Santa-Donato points out that the incoming administration’s potential tax cuts could boost growth — making big rate cuts less likely in 2025.
What could make mortgage rates stay the same or go higher this year?
“The biggest [risk] is inflation proving to be more stubborn than expected,” says Parangi. “If inflation doesn’t get under control, the Fed will be forced to keep rates high to prevent inflation from spiking again.”
Supply chain problems and global tensions could also affect your mortgage costs. These disruptions could drive prices higher, fueling more inflation concerns.
The strong job market presents another challenge. While good for the economy, robust employment numbers might convince the Fed to keep rates elevated longer.
Should I buy a home now or wait?
Don’t let mortgage rates be your only guide in deciding when to buy a home.
“What matters is finding a home you love at a fair price with an affordable payment,” Heller says. While rates might change, your monthly payment must fit comfortably into your budget, including extra funds for maintenance and unforeseen costs.
Instead of waiting for rates to fall, Parangi suggests focusing on what you can control. Start by checking home inventory in your area and reviewing your finances. Consider your job security, emergency fund and long-term plans. When you’re ready to buy, shop around for rates and loan programs — and be prepared to act quickly when you find the right home.
The bottom line
Nobody knows exactly where mortgage rates will land in 2025. But your success in the housing market depends more on preparation than prediction. Don’t let rate forecasts distract you from making meaningful progress toward homeownership.
Experts suggest starting by working with professionals who understand your specific market, connecting with local lenders who can explain your loan options, including rate buy-downs and adjustable-rate mortgages and meeting with real estate agents who know your target neighborhoods and can alert you to upcoming listings. By building this network now, you’ll be better prepared to move swiftly when the right opportunity comes — whether rates drop below 6% or not.
