The beginning of 2025 has brought a mix of signals for the U.S. economy. While inflation has eased from its peak in 2023, it remains above the Federal Reserve’s target of 2%, currently sitting at 2.7%. This, combined with high interest rates, means mortgage rates are still hovering between 6% and 7%. These elevated rates have caused many prospective homebuyers to delay their plans, awaiting more favorable borrowing conditions.

As the Federal Reserve hints at potential rate cuts this year, a common question arises: Will mortgage rates finally dip below 6%? Industry experts have weighed in, offering insights into what to expect and the key factors to watch as the year unfolds.

Expert Predictions on Mortgage Rates

Opinions among industry professionals vary. Some see a gradual decline in mortgage rates, while others suggest that the current levels might persist.

Chris Heller, president of Movoto.com, is optimistic that rates could fall below 6%, but he cautions that this shift would take time. Conversely, Emanuel Santa-Donato, senior vice president and chief market analyst at Tomo Mortgage, argues that historical trends make it unlikely for mortgage rates to drop below 6% this year.

Steven Parangi, a licensed mortgage loan originator and owner of Alpine Mortgage Services, offers a middle-ground perspective. “While I’d like to believe rates could fall below 6% in 2025, the probability is moderate at best,” he notes, echoing the Mortgage Bankers Association’s forecast of rates remaining between 6% and 7% throughout the year.

Factors That Could Drive Rates Lower

Several conditions could contribute to a decline in mortgage rates. According to Heller, “For rates to dip below 6%, sustained moderation in inflation would be necessary, prompting the Federal Reserve to loosen monetary policy.”

Monitoring the Consumer Price Index (CPI) can provide valuable clues. A consistent decrease in CPI over several months would indicate cooling inflation, which could pave the way for lower rates.

Additionally, a slowdown in economic growth could apply downward pressure on rates. However, Parangi advises caution, noting that economic slowdowns can also bring instability or reignite inflation, complicating the rate outlook.

Factors That Could Keep Rates Elevated

On the flip side, stubborn inflation remains the primary risk to rate reductions. “If inflation proves difficult to control, the Federal Reserve will likely maintain high rates to prevent further price surges,” says Parangi.

Other contributing factors include global supply chain disruptions and geopolitical tensions, both of which could drive prices higher. Additionally, the strong labor market may incentivize the Fed to keep rates elevated to prevent the economy from overheating.

Should You Buy a Home Now or Wait?

Deciding when to buy a home shouldn’t hinge solely on mortgage rates. “The key is finding a home that fits your needs and budget,” Heller advises. Even if rates fluctuate, ensuring your monthly payment is manageable and leaves room for maintenance and unexpected expenses is crucial.

Parangi recommends focusing on factors within your control. Start by assessing local home inventory and evaluating your financial readiness, including job stability and savings. When the time feels right, compare mortgage rates and loan programs, and be ready to act quickly if you find the right property.

Conclusion

The trajectory of mortgage rates in 2025 remains uncertain. However, experts agree that preparation and informed decision-making are more important than attempting to predict rate changes. By working with knowledgeable real estate professionals and exploring various loan options, you can position yourself for success in the housing market, regardless of where rates land.