30-07-2025
When will mortgage rates drop below 6%?
Mortgage rates need to get below 6% to reinvigorate the frosty housing market, according to the National Association of Realtors (NAR). A 30-year fixed-rate mortgage at 6% would make the median-priced home affordable for about 5.5 million more households, NAR economists shared at the July 16 Real Estate Forecast Summit.
"If rates were to hit that magic number, it's likely that about 10%, or 550,000, of those additional households would buy a home over the next 12 or 18 months," the organization said in a release.
But NAR's experts don't see rates hitting that threshold until next year. And Fannie Mae has predicted they'll stay at 6% or higher at least until 2027.
While home shoppers may be hoping interest rate cuts later this fall will do the trick, national housing expert Jonathan Miller doesn't think it would move the needle.
"Even with various Wall Street firms forecasting one to three rate cuts in the back half of 2025, it seems unlikely that cuts will be able to drive mortgage rates lower, Miller, founder and CEO of appraisal firm Miller Samuel, told CNBC Select. "There's just a lot of concern and uncertainty about the economy and the impact of tariffs."
Banks are hesitant to cut mortgage rates in times of economic uncertainty, Miller said, when funding loans carries more risk for them.
Just because rates will likely remain elevated doesn't mean you should wait two years to take out a mortgage, says NAR deputy chief economist Jessica Lautz.
It may even be cheaper now, she added.
"It's actually a really good moment for homebuyers when rates are flat," Lautz said, "as opposed to seeing a surge in demand when rates drop and having to compete, and maybe even bid up an offer, for that listed home."
The current rate environment is an important consideration when mortgage shopping, Lautz said, but "there are so many factors that go into what someone is paying every month for their mortgage."
Some are more under your control, including your credit score, debt-to-income ratio and the size of your down payment.
If you're waiting for a rate drop, take the next six months to pay down debt and build your savings. You'll not only improve your credit score, but you'll have more to contribute upfront.
Lautz added that, while rates have been historically high, they've also remained relatively flat, which can be very helpful.
"They've been in the mid-6% range, 6.7% or 6.8%, since January, she said. "It allows a buyer to plan out the homebuying process, to look at homes with a realtor and to lock in a rate and feel okay about it. Not like they're going to miss out."
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Housing experts don't expect a significant decline this year, or possibly even next. Freddie Mac has forecasted that mortgage rates will hit 6.4% at the close of 2025 and 6.0% at the end of 2026
Rates have been flat since January 2025, hovering below 7%. NAR economist Jessica Lautz says rate stability makes for a great environment for homebuying. There are fewer shoppers on the market, home prices don't rise dramatically and buyers won't feel like. they're missing out by not holding off another month or two.
While mortgage rates could go down in 2026, the ongoing housing shortage means average home prices won't show any signs of decreasing. Whether you'd pay more for a specific property in 2025 versus 2026 depends on a host of variables, not just the mortgage rate landscape.
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