When Will Mortgage Rates Go Down: 2025 Forecast and What Homebuyers Should Expect

For anyone planning to buy a home or refinance, one question stands out: when mortgage rate will go down?

After years of historically low borrowing costs, the sharp spike since 2022 has left many buyers wondering if there’s relief ahead. In this article, we’ll explore expert predictions on when mortgage rates might finally decline — and whether rates as low as 4% could ever return.

Current State of Mortgage Rates in 2025

As of early 2025, mortgage rates remain elevated compared to the pandemic era. Freddie Mac’s Primary Mortgage Market Survey (PMMS) reports an average 30-year fixed rate around 6.5%, down from over 7% in late 2023 — a modest improvement for those wondering when mortgage rate will go down.

High rates are affecting more than monthly payments. Home loan underwriting has become stricter, with lenders applying tougher standards. Whether you're navigating underwriting mortgage approvals or simply asking what is mortgage underwriting, higher rates make qualifying more challenging.

Why Are Mortgage Rates Still High?

Several factors explain why mortgage rates have not gone down sharply yet:

Federal Reserve policy: Although the Fed paused rate hikes, it hasn’t aggressively cut rates.
Inflation concerns: Inflation, while easing, remains persistent, influencing stricter mortgage underwriting.
Economic resilience: A strong labor market and steady GDP growth delay major rate reductions.

Without clear signs of an economic slowdown, the timeline for when mortgage rate will go down remains uncertain.

Expert Predictions: When Mortgage Rates Will Go Down

Fannie Mae and Freddie Mac Forecasts

Both Fannie Mae and Freddie Mac predict a gradual decrease in mortgage rates through 2025. Their models suggest the 30-year fixed rate could dip to around 5.9% by the end of the year — potentially good news for those closely watching when mortgage rates will go down. For deeper insights, see our detailed analysis of mortgage rate forecasts.

However, even if rates fall, mortgage underwriting standards will likely stay tight, requiring careful preparation.

Broader Market Insights

Market analysts agree: mortgage rates will likely drop slowly during the second half of 2025. To understand how today’s predictions align with long-term patterns, see our chart of 30-year mortgage rates over the past 50 years.However, unexpected economic shocks could shift the timing, once again raising the crucial question: when will mortgage rates finally go down?

Will Mortgage Rates Ever Return to 4%?

A big part of the discussion around when mortgage rate will go down centers on the dream of 4% rates.

Returning to 4% would likely require:

A major economic recession
Aggressive Federal Reserve rate cuts
A rapid deflationary trend

Most experts say 4% mortgage rates are unlikely before 2026, if ever. So for buyers undergoing mortgage underwriting today, adjusting expectations is critical.

Should You Buy Now or Wait?

The debate isn't just about when mortgage rate will go down, but whether waiting is the smarter choice.

Risks of waiting: Home prices might keep rising, and underwriting could get even stricter.
Advantages of buying now: Sellers are more willing to offer concessions, including underwriting assistance.

If rates drop later, you can refinance — but waiting for perfect timing often backfires. If rates drop later, you can refinance — but waiting for perfect timing often backfires. Focus instead on your personal financial readiness and understanding the mortgage underwriting process to make smart decisions. For detailed strategies on whether to buy or refinance in 2025, explore our guide to mortgage rate strategies.

How to Navigate High Mortgage Rates in 2025

If you're worried about high rates, here are smart moves:

Boost your credit score for a stronger mortgage underwriting profile.
Explore FHA, VA, and USDA loans with more flexible underwriting.
Negotiate seller concessions to reduce upfront costs.
Consider ARMs (Adjustable-Rate Mortgages) if you plan a shorter stay.

Preparation is key — especially when facing tight underwriting conditions.

Quick FAQ: When Mortgage Rate Will Go Down

Q: When are mortgage rates expected to drop?

A: Most forecasts suggest a slow decline throughout 2025, with more noticeable drops in late 2025.

Q: Will mortgage rates go down to 4% again?

A: It's unlikely before 2026 without a major economic recession.

Q: Should I wait for lower mortgage rates?

A: Instead of waiting, focus on buying when you’re financially ready and consider refinancing later.

Expect Gradual Declines, Not a Sharp Drop

While many homebuyers anxiously ask when mortgage rate will go down, the reality is a gradual easing, not a dramatic crash.

Rather than holding out for 4% rates, focus on preparing for the underwriting process and making moves that align with your financial goals. Stay informed, stay flexible, and you'll be ready when the right opportunity arises.

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