Interest rates for mortgages, credit cards, and auto loans: Expert forecasts for 2025.

• It is predicted that the Federal Reserve will maintain rates at its January meeting and may make a few additional rate cuts throughout the year.
• By the end of 2025, most types of consumer loans will become moderately cheaper, according to Bankrate chief financial analyst Greg McBride.
• Here are his predictions for the future of mortgage rates, credit cards, auto loans, and savings accounts.

The Federal Reserve cut rates three times in 2024, resulting in a full percentage point reduction in the federal funds rate since September. This trend is expected to continue in 2025.

Although inflation remains above the Fed's 2% target, a robust labor market and a new administration have prompted the central bank to adopt a more cautious approach to rate cuts in the upcoming year.

According to the minutes of their December meeting, Federal Reserve officials reduced their outlook for expected cuts in 2025 from four to two, assuming quarter-point increments.

UBS Global Wealth Management's chief investment officer for the Americas, Solita Marcelli, expressed concerns that the Federal Reserve may not have much room to lower interest rates in 2025 due to strong U.S. economic data in a research note.

150,000 more borrowers have been forgiven student loans by Biden.

According to Greg McBride, chief financial analyst at Bankrate, experts predict that the Fed will maintain interest rates at its January meeting and make only a few rate cuts throughout the year. As a result, Americans can expect their financing costs to decrease slightly, but not significantly.

"Rates were unusually low for 15 years and have been unusually high for the past two years. However, they are currently decreasing, and it is predicted that they will eventually stabilize at a level higher than what was seen before 2022."

Despite Fed officials signaling two cuts, McBride anticipates up to three cuts this year, resulting in a key benchmark rate of 3.5%-3.75%. Although this rate does not reflect what consumers pay, the Fed's actions will still impact the borrowing and savings rates that consumers experience daily.

In the upcoming year, he forecasts the direction of interest rates for various financial products such as mortgages, credit cards, auto loans, and savings accounts.

Prediction: Credit card rates fall to 19.8%

The average credit card interest rate has only slightly decreased since the central bank began lowering interest rates.

The average APR on a credit card is predicted to decrease to 19.8% by the end of 2025, which is about a half percentage point lower than the current rate.

Those with a monthly balance need to intensify their debt repayment efforts as rates may not decrease quickly enough to offer significant relief within a billing cycle or two, according to McBride.

Prediction: Mortgage rates to hit 6.5%

Since the Fed started reducing interest rates in September, mortgage rates have increased rather than decreased, according to McBride.

McBride anticipates that mortgage rates will remain in the 6% range for most of the year, with a brief increase above 7% for a brief period.

If the 30-year fixed-rate mortgage ends the year at 6.5%, it will not affect most people since they have fixed-rate mortgages. Their rate will only change if they refinance or sell their current home and buy another property.

Prediction: Auto loan rates edge down to 7%

Higher vehicle prices and increased interest rates on new loans have resulted in larger monthly car payments for consumers.

Lower rates could benefit anyone planning to finance a new car, but affordability concerns won't be significantly impacted.

According to McBride, five-year new car loan rates are predicted to decrease from 7.53% to 7%, while four-year used car financing costs may drop from 8.21% to 7.75% by the end of the year.

Prediction: High-yield savings rates dip below 4%

According to McBride, in recent years, high-yielding online savings accounts have provided the best returns in over a decade, with rates of nearly 5%.

Although the rates are declining, they are doing so at a slow pace, and they remain above inflation, according to McBride.

By the end of 2025, McBride predicts that savings accounts and money market accounts could reach 3.8%, while one-year and five-year CD yields will decrease to 3.7% and 3.95%, respectively.

McBride stated that the total of these factors creates an appealing setting for savers.