Would-be homebuyers and households looking to refinance their mortgage loans are in for quite the surprise this year - mortgage rates aren’t falling fast enough, in fact, they’re predicted to remain stubbornly high this year.

Several industry experts have commented on the subject, and the outlook isn’t promising. Experts are certain that mortgage rates are expected to remain above 6% for much of this year and even into 2026.

Despite the somewhat promising improvements in mortgage rates last year, with the average 30-year mortgage falling to 6.08%, according to data by Freddie Mac, conditions have since taken a sharp turn, and rates have started climbing again.

The average 30-year mortgage is again steadily approaching 7%, while the 15-year mortgage has climbed to 6.13% after reaching a low of 5.15% in September 2024.

Many industry experts have been surprised by the sudden and perhaps unexpected performance of mortgage rates, even as interest rates started falling sharply following several rate cuts near the end of last year.

In December last year, the hawkish Federal Reserve announced a third rate cut for the year, reducing the central bank’s target rate to between 4.25% and 4.5%. In December’s meeting, Fed Chair Jerome Powell called for policymakers to have penciled in more rate cuts for 2026, however, elevated inflation could persist.

The performance of the housing market continues to be subdued by a shortage of inventory, rising prices, and the “lock-in” effect. Even as the cost of borrowing starts to decline, mortgage rates are moving in an opposite direction, frustrating would-be buyers, and remaining a major headwind for households looking to lower their loan costs.

Mortgage Rate Predictions For 2025

Experts have signaled mixed predictions for mortgage rates this year, however, the majority estimate that rates will remain elevated, and will see some improvement nearing the middle of 2026.

Fannie Mae delivered an outlook that would see the average 30-year mortgage rate maintaining a level above 6.5%, and falling towards 6.0% by the third and fourth quarters of next year.

The Mortgage Bankers Association (MBA) is less optimistic about the year ahead. For starters, experts estimate that the average mortgage rate will remain between 6.4% and 6.5% for much of this year, and stagnate at 6.3% starting 2026.

Elsewhere, the National Association of Realtors (NAR) has predicted that mortgage rates will remain at 6% or higher this year. At the same time, Redfin sees a similar outlook, with some weekly fluctuations in the average rate throughout the year, and hitting an average of 6.8% by the fourth quarter.

Bankrate analysts have posted a more optimistic outlook for the year. For starters, analysts project that the Federal Reserve will cut interest rates three more times during the year. This could bring the key borrowing benchmark rate down between 3.5% to 3.75%.

Similarly, Bankrate predicts that the average 30-year fixed rate will fall by 0.54% at the end of this year, which will be significantly lower than its year-end 2024 level.

In the same boat is Realtor.com. Analysts expect that the mortgage rates will remain above the 60 percent threshold, however, will steadily decline over the coming months, averaging at 6.3%, before ending the year at 6.2%.

Overall, the outlook for the mortgage market paints a seemingly dull picture for potential buyers who have been shopping around for a cheaper rate - but that’s not to say that conditions haven’t made any improvements.

In fact, even taking into account that these estimates are still higher than before and during the pandemic, the average 30-year mortgage rate will still be lower compared to 2023 and 2024.

In November 2023, the 30-year average rate peaked at 7.76%, with the 15-year average reaching 7.03%. Between then and May 2024, rates remained relatively elevated, before seeing a sharp decline throughout the summer and falling to its lowest levels in nearly three years.

House Prices To Stay Elevated

Though mortgage rates have improved, albeit gradually, average house prices, including multi-family homes, will continue to increase this year, with some experts predicting that an increase in inventory levels could push down prices near the end of the year and by the start of 2026.

The majority of analysts tracked by ResiClub estimate that the average U.S. home price will increase by 2.7% in 2025. Morgan Stanley, another one of the first tracked by ResiClub, is forecasting that nationally aggregated home prices are projected to fall by 2% this year.

Redfin delivered the highest median home sale price increase at 4%, Zillow predicted a 2.6% increase in home value growth, while Fannie Mae called a forecast of a 3.8% gain in house prices.

Currently, the average U.S. home value is $357,469 as of November 30, 2024, according to Zillow. Between 2023 and 2024, home prices increased on average by 2.5% in the lower end of the property market.

However, this estimate is well below that of the Federal Reserve Bank of St. Louis. The banks’ third-quarter observation estimated that the median house price sold in the U.S. was closer to $420,400.

This observation is below the former peak of $442,600, which was recorded in the second quarter of 2022. Despite the median home price stabilizing in more recent quarters, prices are still sitting above what they were during the early onset of the pandemic, and well above recorded prices of 2018 and 2019.

According to the 2025 Top HousingMarkets report by Realtor.com, most of this year’s top real estate markets will be located in the Sun Belt, including Virginia climbing to the top of the list at third, Florida in second, and Colorado at the top spot. Cities including El Paso and McAllen, Texas ranked higher this year.

Across much of the country, buyers will be facing higher prices for single and multi-family homes, however, an increase in inventory for new builds could help to stabilize prices slightly near the end of the year.

However, homeowners sitting on a lower mortgage rate may continue to be in a locked-in position for much longer, even as the value of their home continues to grow and demand remains steady.

For one, buyers who managed to secure a substantially low mortgage rate during the period when lending rates were near zero have since been locked in to keep their lower rates, rather than upgrading and having to sit with a more costly mortgage loan.

In return, many current homeowners have decided against the possibility of selling, impacting the number of homes that have traded hands in the last couple of years, and seeing fewer new homes entering the market.

Perhaps this is the year that many homeowners decide to upgrade, or rather sell their current home and look for something else instead, even if this means taking on a higher mortgage.

In the long term, this could help ease the pricing pressure the property market has experienced over the last few years, but would-be homeowners will continue to be faced with exuberant prices and elevated rates, despite the market improvements.

A Costly American Dream

Current projections show that conditions in the housing market will remain unchanged. American buyers will continue to be faced with stubbornly high mortgage rates, even as the hawkish Federal Reserve cuts interest rates.

Home prices aren’t looking to change that much either, even with some analysts having a slightly bearish outlook. Strong demand and gradual improvement in inventory levels could help ease housing inflation.

For what it’s worth, it seems to be yet another challenging, and costly year for many would-be home buyers. Those buyers, and sellers, waiting for better days to come might need to start thinking about shifting gears, if not now, then in 2026.