Mortgage Rates Just Turned the Housing Market Upside Down

Mortgage rates have dropped significantly from just one year ago and looking ahead, most analysts expect mortgage rates to continue to fall which should most home buyers and sellers. 

For Buyers: Lower mortgage rates means increased affordability.

For Sellers: Lower mortgage rates means more buyer demand.

Moody’s chief economist Mark Zandi reaffirmed his 2025 mortgage rate outlook, which he has held since fall 2022.

“I expect the 30-year fixed mortgage rate will be closing in on 6.0% by the end of the year and settle in near 5.5% by the end of 2025. The decline in mortgage rates is due to a narrowing in the spread with the 10-year Treasury yield as the Fed eases policy, the yield curve becomes normally sloped and bond volatility declines, and pre-payment risk normalizes,” Zandi tells ResiClub.

Big thing to watch: Labor market data. If the labor market begins to cool faster than expected, or unemployment spikes, short-term and long-term interest rates could fall faster than expected. Reversely, if the labor market tightens up, we could get fewer cuts than currently expected.

If you have questions about how mortgage rates could affect your real estate plans for the future, don’t hesitate to contact Kathleen immediately.