Mortgage rates are projected to decline slightly in 2025, but the drop may not be significant enough to ease the U.S. housing affordability crisis for many potential buyers.

According to Realtor.com’s 2025 housing forecast, released Wednesday, the 30-year fixed-rate mortgage is expected to average around 6.3% throughout the year, ending 2025 at approximately 6.2%. However, the report cautions that economic and policy uncertainties could cause rates to diverge from this forecast.

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“Housing affordability will be a make-or-break issue for many households in 2025. Mortgage rates will be the key factor tipping the scales for buyers and sellers alike,” said Danielle Hale, chief economist at Realtor.com, in an interview with FOX Business.

Current Mortgage Trends

The most recent Freddie Mac Primary Mortgage Market Survey shows the average rate for a 30-year fixed mortgage at 6.81%. While this marks an improvement from last year’s 7.22%, many residential real estate buyers and sellers remain hesitant. Zillow data reveals that about 80% of current mortgage holders have a rate below 5%, contributing to the “lock-in” effect where homeowners are reluctant to sell and lose their favorable rates.

Outlook for 2025

Hale anticipates that modest rate improvements, coupled with rising incomes, will keep housing costs relatively stable and slightly improve affordability. This could result in a gradual increase in home sales next year.

“The expected decline in mortgage rates won’t drastically alter the lock-in effect for existing homeowners. However, time and life events will likely reduce the share of outstanding mortgages under 6% from 84% in mid-2024 to 75% by the end of 2025,” Hale explained.

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Hale also noted that if mortgage rates decline more rapidly than expected, home sales could see stronger growth. Conversely, if rates remain higher, sales may stagnate.

For now, prospective buyers and sellers should remain prepared for modest but important changes, as affordability continues to challenge the housing market in 2025.

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