If you’re thinking about buying a home, it’s important to know what might happen with mortgage rates in the next few years.
Fannie Mae, a big company that helps with home loans, has made a surprising update to its predictions for mortgage rates.
Here’s what you need to know in simple terms.
Mortgage Rates Stay High Longer Than Expected
In 2022, mortgage rates went up, and many people thought this would be temporary.
However, rates have stayed high for the past three years. This has made it harder for people to buy homes.
Experts had hoped that mortgage rates would go down in 2025, but Fannie Mae has now said that mortgage rates will not drop much over the next two years.
In fact, they expect mortgage rates to stay around 6.8% in 2025, up from a previous forecast of 6.6%. This is bad news for home buyers hoping for lower rates.
Why Are Mortgage Rates Staying High?
One reason mortgage rates are staying high is inflation (prices for things like food and gas going up).
Inflation is still a problem, which means the Federal Reserve (the group that helps set interest rates) might not lower rates as much as they hoped.
Also, the general economy is uncertain, which keeps rates from going down.
Fannie Mae’s New Forecast
Fannie Mae predicts that mortgage rates will stay high for a while, even though they may drop a little in 2026.
They expect rates to be around 6.5% by 2026. But, many buyers believe rates need to be below 5% to feel comfortable buying a home.
Fannie Mae’s Predictions for the Federal Reserve (Fed) Interest Rates
Fannie Mae also updated its prediction for the Federal Reserve’s interest rates. These rates affect mortgage rates, but they are not the same thing.
The Fed was expected to cut interest rates several times in 2025 and 2026, but now it looks like the Fed will only cut them once in 2025, by 0.25%.
This means that the economy will likely stay tough for home buyers for the next few years.
How Will This Affect Home Buyers?
With higher mortgage rates and rising home prices, buying a home will still be difficult for many people.
If you’re thinking about buying a home, it’s important to be prepared for the higher rates and prices.
| Key Takeaways | Details |
|---|---|
| Mortgage Rates Staying High | Mortgage rates are expected to stay around 6.8% in 2025, higher than expected. |
| Why Rates Are High | Inflation and economic uncertainty are keeping rates high. |
| Federal Reserve’s Plans | The Fed is only expected to cut interest rates by 0.25% once in 2025. |
| Housing Market Challenges | With high rates and rising home prices, buying a home is still tough for many buyers. |
What Can You Do?
If you’re planning to buy a home, it’s important to stay informed about mortgage rates and home prices.
Talk to a mortgage lender to see what rates you might qualify for, and make sure you’re financially ready for the higher costs.