Published by REALTOR.com | September 20, 2024
To see where experts predict mortgage rates might go over the next 18 months, Realtor.com rounded up the quarterly mortgage rate forecasts from various sources.
The Federal Reserve’s historic rate cut this week could usher in a period of lower mortgage rates.
Predicting the financial market’s next move has never been simple. Experts must consider a plethora of shifting economic variables, and even then, they don’t always hit the mark. Add in an extremely impactful unforeseen event such as the COVID-19 pandemic—which introduced a combination of work-from-home and ultralow interest rates—and forecasting interest rates is even trickier.
But that doesn’t mean forecasting models aren’t worth paying attention to, especially when big names seem to agree on where rates are headed.
To see where experts predict the 30-year fixed mortgage rate might go over the next 18 months, Realtor.com® rounded up the quarterly mortgage rate forecasts from three major firms: the Mortgage Bankers Association, Fannie Mae, and Wells Fargo.
By Q4 2025, Fannie Mae expects the 30-year fixed mortgage rate will average out at 6.2%. The MBA expects 6.0%, while Wells Fargo forecasts 5.9%.
Simply put, all three firms expect a mild mortgage rate decrease over the next 18 months.
The Realtor.com economics team expects a similar trajectory.
“While rates are expected to bounce around a bit, we expect them to be in the low 6% range by year’s end,” says Realtor.com Chief Economist Danielle Hale. “The Realtor.com forecast also anticipates that mortgage rates will move lower, perhaps into the upper 5% range by the end of 2025.”
Mortgage rates hit a multidecade high of 7.79% for the average 30-year fixed home loan in October 2023. Since then, rates have eased to their lowest point in over a year, to 6.09% for the week ending Sept. 19.
All that said, we are still well above the 3.5% to 5.5% range that mortgage rates hovered around in the decade before the pandemic. And even if Wells Fargo, the most optimistic of the forecasters, is correct and the average 30-year fixed mortgage rate falls to 5.9%, we’d still be above that pre-pandemic range.
