Mortgage costs stayed stubbornly high in 2024, with 30-year fixed rates holding well above 6% for most of the year. Unfortunately for buyers, 2025 isn't looking much better.

The Federal Reserve has been cutting interest rates, making the cost of borrowing for loans, credit cards, and auto financing cheaper. But mortgage rates haven't really budged, frustrating potential buyers who had been holding out for lower home financing costs.

Instead, mortgage rates track more closely with 10-year Treasury bond yields, which lenders use as a benchmark for setting long-term borrowing costs.

These yields remain high due to lingering concerns about inflation — fueled by a strong economy and expectations of more deficit spending under president-elect Donald Trump. Investors are demanding higher returns on bonds to offset these risks, and as a result, bond yields — and mortgage rates — are staying elevated.

Trump has also proposed higher tariffs on imported goods, "which is always inflationary," says Doug Carey, a chartered financial analyst and founder of WealthTrace, a financial planning software company. As a result, mortgage rates could remain higher than expected in 2025, he says.

What mortgage rates will look like in 2025

With so much economic uncertainty, the outlook for mortgage rates in 2025 remains challenging for buyers.

While the Federal Reserve is expected to further reduce its benchmark interest rate by another 50 basis points, bringing it to a range of 3.75% to 4%, these cuts might not be enough to significantly lower borrowing costs for homebuyers.

That said, most forecasts have 30-year rates below the current rate of 7.11% as of Monday morning, according to Mortgage News Daily.

Here's a look at the latest projections for 30-year fixed mortgage rates in 2025 from leading financial institutions and industry organizations:

• Mortgage Bankers Association forecasts a range of 6.4% to 6.6%
• Realtor.com anticipates rates to end the year at around 6.2%.
• Fannie Mae expects rates to average 6.4% for the year
• Wells Fargo projects a slight decline, with rates averaging around 6.3% by the end of the year
• Goldman Sachs predicts rates will remain above 6% through 2025

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