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Mortgage Rates Expected to Ease, But Will It Help With Housing Affordability Crisis?
Realtor.com’s 2025 housing forecast predicts that mortgage rates will continue to ease, but the decline may not be enough to alleviate the ongoing affordability crisis in the US. According to the forecast, the benchmark 30-year fixed rate mortgage is expected to average around 6.3% in 2025, dropping slightly to 6.2% by the end of the year.
However, while mortgage rates are expected to fall modestly, Realtor.com’s chief economist, Danielle Hale, warns that there are uncertainties ahead that could cause mortgage rates to deviate from the forecast. Home prices are expected to remain high, making housing affordability a make-or-break factor for many households.
In the latest Primary Mortgage Market Survey, Freddie Mac reported that the average rate on the 30-year fixed mortgage is at 6.81%, an improvement from last year’s 7.22%.Yet, about 80% of mortgage holders have rates below 5%, according to a Zillow survey.
Hale believes that the anticipated improvement in rates will keep housing costs roughly stable and, combined with higher incomes, support modest improvement in affordability, leading to a slightly higher number of home sales in 2025. While the modest decline in mortgage rates may not lead to a large reset in the lock-in effect for existing homeowners, Hale expects the share of outstanding mortgages under 6% to fall from 84% in mid-2024 to 75% by the end of 2025.
