Mortgage rate predictions March 2025
Inflation is hovering higher than hoped, and the Federal Reserve looks less likely to lower its benchmark rate, factors that mean mortgage rates aren’t likely to move much this month. However, a slowing economy and new post-election uncertainty could push mortgage rates down a bit in March, mortgage insiders say.
“Recent economic data has pointed to a cooling U.S. economy, and bond yields have tumbled to their lowest level in three months,” says Melissa Cohn of William Raveis Mortgage. “Additional concerns that massive layoffs and spending cuts in the federal government will cause a rapid downshift in economic activity have led many to believe that the economy is about to have the rug pulled out from underneath it, which will cause rates to continue to fall.”
For months, mortgage rates have been held aloft by the combination of a still-strong economy, inflation fears and growing concerns about a rising federal deficit.
So much for hopes that mortgage rates were headed back into the 5 percent range. The average 30-year mortgage rate began declining from 7 percent last summer, fell to as low as 6.2 percent in September, then quickly reversed course, tracking back above 7 percent by the end of 2024, according to Bankrate’s weekly lender survey. However, as of Feb. 26, rates had fallen to 6.84 percent, their lowest level of the young year.
The Federal Reserve doesn’t directly set mortgage prices, but the central bank does influence them. The Fed cut its benchmark rate three times last year, but it held steady at its January meeting.
Learn more: How the Fed affects mortgage rates
Will mortgage interest rates go down again?
The possibility of sub-6 percent mortgage has grown fainter. Fannie Mae predicts rates will edge down to 6.6 percent by the end of the year, while the Mortgage Bankers Association expects 30-year rates will decrease to 6.5 percent by the end of 2025.
“I don’t think we’re going to see mortgage rates fall as everyone hoped,” says Lisa Sturtevant, chief economist at Bright MLS, a large listing service in the Mid-Atlantic region. “It feels like rates are going to be well in the 6s. But that might not be as big an obstacle as we might have thought. There’s this anchoring going on where buyers and sellers are getting used to 7.”
Learn more: Housing market trends to watch in 2025
Current mortgage rate trends
Higher mortgage rates have kept homeowners clinging to lower-cost loans, a trend known as the “lock-in effect.” Meanwhile, the median national home price clocked in at $396,900 in January, according to the National Association of Realtors.