2025 Rate Predictions: Will We See a Drop or Stay Steady?

Today’s mortgage interest rates are a mixed bag, with some creeping up while others take a dip. If you’re eyeing that coveted 30-year fixed mortgage rate, brace yourself: it’s risen by four basis points to a striking 6.67%—the highest it’s been since June.

So, what does this mean for your dream of homeownership in 2025? The quick answer: it’s complicated.

Let’s dig a little deeper. Just a few months back, experts were hopeful for lower mortgage rates by 2025. But now? Predictions have taken a more cautious turn, thanks to factors like the 10-year Treasury yield and a less optimistic outlook on Federal Reserve rate cuts. With talks of a potential second Trump presidency influencing market sentiment, the forecast is looking more conservative. In fact, a recent report suggests that by Q1 2025, we might see the 30-year fixed rate hover around 6.60%, with a possible dip to 6.20% by Q4 2025. If you’re sitting tight, hoping for a major drop in rates before making a move, it might be time to reconsider.

Want to know more? Check out our insights on the 2025 housing market — Is it a good time to buy a house?

Here’s the latest scoop on current mortgage rates as per the latest data:

• 30-year fixed: 6.67%

• 20-year fixed: 6.52%

• 15-year fixed: 6.03%

• 5/1 ARM: 6.71%

• 7/1 ARM: 6.60%

• 30-year VA: 6.07%

• 15-year VA: 5.57%

• 5/1 VA: 6.32%

Keep in mind, these figures represent national averages rounded to the nearest hundredth.

Now, let’s talk refinance rates. Here’s what’s trending today:

• 30-year fixed: 6.71%

• 20-year fixed: 6.33%

• 15-year fixed: 5.95%

• 5/1 ARM: 5.93%

• 7/1 ARM: 6.65%

• 30-year VA: 6.08%

• 15-year VA: 5.84%

• 5/1 VA: 5.67%

Again, these numbers represent national averages rounded to the nearest hundredth. Typically, refinance rates may be higher than those for buying.

Curious about refinancing? Read more about Is now a good time to refinance your mortgage?

Take a moment to explore the free mortgage calculator to understand how different rates and terms will impact your monthly payments.

Our handy calculator takes into account property taxes and homeowners insurance, so you’ll have a clear picture of your total monthly costs—not just the loan itself.

Right now, the average 30-year mortgage rate stands at 6.67%. This long-term option remains popular since spreading payments over 360 months leads to more manageable monthly costs.

If you’re considering a 15-year mortgage, the average rate sits at 6.03%. When weighing between a 15-year and a 30-year mortgage, it’s crucial to align your choice with your financial goals.

Opting for a 15-year mortgage means you’ll enjoy a lower interest rate, allowing you to pay off your loan 15 years sooner, saving you a hefty sum in interest. However, keep in mind that your monthly payments will be higher as you’re repaying the same amount in half the time.

Picture this: you secure a $300,000 mortgage with a 30-year term at 6.67%. Your monthly payment would be about $1,930, leading to a total of $394,752 in interest over the loan’s lifespan, stacking on top of that original amount.

Now, if you switch to a 15-year mortgage at 6.03%, your monthly payment would leap to $2,536, but you’d only incur $156,558 in interest throughout the years.

With a fixed-rate mortgage, your interest rate is locked in for the entirety of your loan. However, refinancing means a whole new rate may be set.

On the flip side, an adjustable-rate mortgage has your rate fixed for an initial period, then can fluctuate based on various economic factors. For example, with a 7/1 ARM, your rate remains unchanged for the first seven years, then adjusts annually for the remaining 23 years.

While adjustable rates often start lower than fixed rates, keep in mind that they can increase after the initial period. In fact, some fixed rates have recently dipped lower than adjustable rates. Always consult your lender for the best options tailored to your needs.

Looking to learn more? Dive into our comparison of Fixed-rate vs. adjustable-rate mortgages.

Mortgage lenders typically offer the best rates to those with substantial down payments, exceptional credit scores, and low debt-to-income ratios. If you’re aiming for a lower rate, consider saving more, boosting your credit score, or chipping away at your debt before starting your home search.

Patience in waiting for rates to drop may not be the ideal strategy unless you’re in no rush and can hold off until late 2024 or 2025. If you’re prepared to make a move, your personal financial health could be the key to securing a better rate.

To discover the best mortgage lender for your unique situation, consider applying for mortgage preapproval with three or four lenders. Just make sure to do this within a short window to get the most accurate comparisons while minimizing impact on your credit score.

When selecting a lender, don’t just focus on interest rates; pay attention to the mortgage annual percentage rate (APR). This number reflects the true cost of borrowing, taking into account interest rates, discount points, and fees. It’s the most pivotal figure for assessing mortgage lenders.

Although Zillow reports that the national average 30-year mortgage rate is 6.67% and the average 15-year rate is 6.03%, remember that local averages may vary significantly. Typically, higher averages are found in pricier regions of the U.S., while more affordable areas reflect lower averages.

As it stands, the average 30-year fixed mortgage rate is 6.67%. If you have an excellent credit score, a solid down payment, and a low debt-to-income ratio, you might secure an even better deal.

While mortgage rates aren’t expected to plummet anytime soon, small fluctuations here and there might be on the horizon. Stay informed and proactive as you navigate your home-buying journey!