How low could mortgage rates fall by the end of 2025? Experts weigh in

Mortgage borrowers have finally started to see some relief. Thanks to a Federal Reserve rate cut and falling 10-year Treasury yields, the average rate on 30-year loans has hovered in the mid to low 6% range in recent weeks — down from the nearly 7% rate seen at the start of the year.

But rates are always in flux. And with the Fed meeting two more times before the year is up — not to mention stubborn inflation — a lot could still happen to mortgage rates in the final months of 2025.

Where do experts think rates are headed, and what should you do if refinancing or buying a home is on your agenda in the coming months? Below, we’ll detail what you need to know now.

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How low could mortgage rates fall by the end of 2025?

Mortgage rates are impacted by many factors, including 10-year Treasury bond yields, Federal Reserve policy, investment activity, and other economic conditions. But this fall, many experts say the jobs market and inflation will be the top influencers in where mortgage rates head.

“Mortgage rates will always follow the most significant economic indicators, which continue to be inflation and labor market data,” says Darren Tooley, senior loan officer at Cornerstone Financial Services and loan officer at Union Home Mortgage. 

“If inflation shows signs of increasing or the labor market begins to show renewed signs of strength, mortgage rates are likely to rise. However, if inflation remains in check and we continue to see signs of weakness in labor data and new job creation, then we will likely see mortgage rates fall, as we have since the end of July.”

A weakening job market is partially why mortgage rates have receded already this year.

“As inflation has come under more control and the job market has shown weakness in 2025, the market believes Fed cuts are more likely,” says Jeff Taylor, who sits on the board of the Mortgage Bankers Association and is founder and managing director of Mphasis Digital Risk. “The result has been mortgage rates dropping from 7.25% in January to 6.375% in mid-October.”

The Federal Reserve is set to meet at the end of October and again in December to evaluate data and weigh additional cuts to its federal funds rate, which mortgage rates tend to loosely follow. Unfortunately, much of the economic data that drives Fed policy and mortgage rates is issued by the government. With the government currently shutdown, that could equate to data lags, too. 

“The direction of mortgage rates in the coming months will largely depend on the release of key economic data once the government reopens,” says Jeff DerGurahian, chief investment officer and head economist at loanDepot. For now, he says, “markets are relying on state-level employment data and private sources, such as corporate earnings reports to gauge economic growth and inflation trends.”

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What’s the current mortgage rate forecast?

For now, forecasts have mortgage rates largely holding steady. The Mortgage Bankers Association predicts the average 30-year rate will end the year at 6.5%, while Fannie Mae projects a slightly lower 6.4% — right around where rates sit today. Both Fannie and MBA update their forecasts monthly, so those projections will change over time.

“Rates have remained within a relatively tight range over the last four to five weeks,” Tooley says. “I expect that trend to continue through the fall.”

Things can always change, though, and rates in the “low 6% range or even slightly below 6% aren’t entirely out of the question,” he says. In order for that to happen, experts say inflation would need to fall more or the job market would need to weaken further.

“We may see them ease toward the low-6% range by the end of the year if data becomes available that shows signs of slower growth, weaker employment, and subdued inflation,” DerGurahian says. “But if the economy shows more strength than expected, rates could stay elevated a bit longer.”

Falling Treasury yields could also allow mortgage rates to drop more significantly. 

“The 10-year Treasury offers the closest look at what is happening with mortgage rates, other than following mortgage-backed securities directly,” Tooley says. “Currently, the 10-year Treasury is knocking on the door of 4%, and if we see it drop below 4%, then seeing rates drop below 6% is a real possibility.”

The bottom line

Whatever you do, if you’re watching rates and considering a home purchase or refinance, then start getting your ducks in a row now. Gather your documents, apply for pre-approval and stay in touch with your lender. You may need to lock your rate fast once the numbers work in your favor. 

“As a homebuyer or refinancer, you should be in touch with your lender on a weekly basis because rate markets have had big swings lately,” Taylor says. “This can change your preapproval and rate lock strategy. The good news is that these rate swings have been downward in 2025, and especially since August. So ask your lender to keep you up to speed on rate changes and how those changes impact your strategy.”