What factors contribute to high mortgage rates and what can borrowers anticipate in 2025?

What factors contribute to high mortgage rates and what can borrowers anticipate in 2025?
What factors contribute to high mortgage rates and what can borrowers anticipate in 2025?

Unfortunately, 30-year fixed mortgage rates remained above 6% for most of 2024 and it seems that 2025 won't bring much relief for buyers as mortgage costs remain high.

Lower borrowing costs for loans, credit cards, and auto financing have been made possible by the Federal Reserve's decision to cut interest rates. However, mortgage rates have not significantly decreased, causing frustration among potential buyers who were hoping for lower home financing costs.

Long-term borrowing costs for mortgages are closely tied to 10-year Treasury bond yields, which serve as a benchmark for lenders.

Elevated mortgage rates are a result of investors demanding higher returns on bonds due to lingering concerns about inflation, fueled by a strong economy and expectations of more deficit spending under president-elect Donald Trump.

According to Doug Carey, a chartered financial analyst and founder of WealthTrace, Trump's proposal of higher tariffs on imported goods could lead to inflation, which could result in higher mortgage rates in 2025.

What mortgage rates will look like in 2025

The uncertain economic climate presents challenges for buyers in predicting mortgage rates in 2025.

Although the Federal Reserve is predicted to decrease its benchmark interest rate by 50 basis points, bringing it to a range of 3.75% to 4%, these reductions may not substantially lower borrowing costs for homebuyers.

According to Mortgage News Daily, most forecasts predict 30-year rates below the current rate of 7.11% as of Monday morning.

The latest projections for 30-year fixed mortgage rates in 2025 from leading financial institutions and industry organizations are available for review.

  • Mortgage Bankers Association forecasts a range of 6.4% to 6.6%
  • Realtor.com anticipates rates to end the year at around 6.2%.
  • Fannie Mae expects rates to average 6.4% for the year
  • By the end of the year, the projected decline for Wells Fargo is expected to be slight, with average rates at approximately 6.3%.
  • Goldman Sachs predicts rates will remain above 6% through 2025

To earn extra money online, sign up for CNBC's course on passive income streams, starting tips, and real-life success stories.

Sign up for CNBC Make It's newsletter to receive expert advice on work, money, and life.

I'm much happier living in Iceland than in the U.S.—here's how much it costs
by Mike Winters

Make It

The 10 least desirable states to retire in the U.S., with 6 of them located in the South.

The 10 least desirable states to retire in the U.S., with 6 of them located in the South.

Make It
Ensure you have essential financial documents readily accessible in case of an emergency—haphazardly rummaging through drawers won't suffice.

Ensure you have essential financial documents readily accessible in case of an emergency—haphazardly rummaging through drawers won't suffice.

Make It
Despite years of rejection for their "terrible" startup idea, two friends have now achieved an "extraordinary success" worth $2 billion.

Despite years of rejection for their "terrible" startup idea, two friends have now achieved an "extraordinary success" worth $2 billion.

Make It
The secret to staying healthy and younger for a decade without relying on food or exercise.

The secret to staying healthy and younger for a decade without relying on food or exercise.

Make It
Discover the cities in the U.S. with the highest paying jobs.

Discover the cities in the U.S. with the highest paying jobs.

Make It
At the age of 17, Tony Hawk made his most profitable investment, which he considers his "saving grace."

At the age of 17, Tony Hawk made his most profitable investment, which he considers his "saving grace."

Make It
When to sell a winning stock: 'If you have an opportunity to change your life, take it'

When to sell a winning stock: 'If you have an opportunity to change your life, take it'

Make It
Stanford psychologist reveals that effective couples employ this potent device to resolve disputes.

Stanford psychologist reveals that effective couples employ this potent device to resolve disputes.

Make It
Harvard researchers reveal the most common jobseeker mistake and provide tips on how to avoid it.

Harvard researchers reveal the most common jobseeker mistake and provide tips on how to avoid it.

Make It
Five in-demand skills on Upwork that often command rates of more than $200 per hour.

Five in-demand skills on Upwork that often command rates of more than $200 per hour.

Make It
An Ivy League-trained child psychologist reveals that good parents who raise confident, well-adjusted kids always prioritize this one thing.

An Ivy League-trained child psychologist reveals that good parents who raise confident, well-adjusted kids always prioritize this one thing.

Make It
New data reveals that Washington, D.C. is the top retirement destination in the United States.

New data reveals that Washington, D.C. is the top retirement destination in the United States.

Make It
According to author Mel Robbins, there are three reasons why it is challenging to form new friendships as you age: 'It's impossible to force friendships.'

According to author Mel Robbins, there are three reasons why it is challenging to form new friendships as you age: 'It's impossible to force friendships.'

Make It
Micromanagers are often mistaken for great leaders, says Airbnb CEO.

Micromanagers are often mistaken for great leaders, says Airbnb CEO.

Make It
A.J. Brown's self-help book became an Amazon best-seller, and one of its key takeaways is:

A.J. Brown's self-help book became an Amazon best-seller, and one of its key takeaways is:

Make It
Mark Cuban's top advice for young professionals: Treat your job as a learning opportunity and get compensated for it.

Mark Cuban's top advice for young professionals: Treat your job as a learning opportunity and get compensated for it.

Make It
Uncommon Goods founder and CEO relinquished a Wall Street job and $10 million to pursue his passion: "Money is not the source of my happiness."

Uncommon Goods founder and CEO relinquished a Wall Street job and $10 million to pursue his passion: "Money is not the source of my happiness."

Make It
This book is a "must-read" for parents, as it advocates for banning smartphones in schools, according to Bill Gates.

This book is a "must-read" for parents, as it advocates for banning smartphones in schools, according to Bill Gates.

Make It
According to a new report, the top 4 jobs of the year are all six-figure positions that are highly sought after.

According to a new report, the top 4 jobs of the year are all six-figure positions that are highly sought after.

Make It
The reason behind the high prices of eggs at over $9 a dozen in certain locations and when the prices are predicted to decrease.

The reason behind the high prices of eggs at over $9 a dozen in certain locations and when the prices are predicted to decrease.

Make It

You might also like