Homebuyers holding out for lower interest rates may be waiting longer than expected. A closely followed housing finance giant is predicting mortgage rates could remain stubbornly above 6% for all of 2025.
Mortgage rates are likely to remain at status quo or higher this year, according to Fannie Mae. The Washington, D.C.-based company buys mortgages from lenders and sells them back to investors as mortgage-backed securities, giving banks and others capital to lend again. Despite its forecast for mortgage rates, Fannie Mae predicts residential sales will still increase nationwide this year, price growth will continue and there will be an uptick in single-family home sales.
Mortgage rates are hovering at 6.87% for a 30-year, fixed-rate mortgage, up from 6.77% a year ago, according to Freddie Mac, another federally controlled mortgage finance firm.
“Given inflation measures have remained stickier than markets expected earlier last year, our economists do not expect a meaningful decline in the 10-year treasury rate in 2025,” said Chryssa C. Halley, executive vice president and chief financial officer for Fannie Mae, during the company's earnings call Friday. “As a result, mortgage rates are expected to remain elevated at above 6%.”
What else does Fannie predict for 2025? Here are three highlights from the earnings call:
- Existing home sales will rise by about 4% to 4.15 million residences from 4 million residences. That's still a 20% drop from home sales seen in 2019.
- Prices will continue to rise with a projected bump of 3.5%, slightly below the 5.8% seen last year.
- All single-family home deals could total $1.9 trillion, higher than the $1.7 trillion seen in 2024.
