If you’ve been camping out waiting for mortgage rates to drop below 6%, you might want to pack up that tent. Those sub-6% rates are looking about as likely as finding a unicorn in your backyard—nice to dream about, but probably not happening.
Here’s the deal: Fannie Mae thinks rates will maybe inch down to 6.1% by year-end, while the Mortgage Bankers Association is even less optimistic, predicting they’ll barely budge to 6.6%. So much for that “rates are definitely dropping soon” prediction everyone’s been making since 2023.
Right now we’re sitting around 6.99% for 30-year mortgages. And hey, if you lived through the horror show of late 2023 when rates hit 8.01%, this might actually feel like a victory lap. But here’s the reality check—they’re pretty much glued to this spot.
The Fed is basically that friend who says they’ll be ready in “five minutes” and then takes an hour. They’re talking about maybe two rate cuts this year, but they’re moving slower than a DMV line on a Monday morning. Throw in some lingering inflation jitters and whatever trade policy curveballs the Trump administration decides to pitch, and you’ve got rates that are basically playing hard to get.
Here’s why I don’t think rates are going anywhere fast: The Fed learned their lesson from the inflation mess of 2021-2022. They’re not about to make the same mistake twice by cutting rates too aggressively and then watching prices spiral again. Plus, the economy is actually doing okay right now—unemployment is low, people are still spending money, and businesses are hiring. When things aren’t broken, the Fed doesn’t feel pressured to “fix” them with emergency rate cuts. Add in the uncertainty around trade policies and potential tariffs, which could push inflation higher, and you’ve got a Federal Reserve that’s perfectly content to sit on their hands and watch from the sidelines. The Fed would rather be accused of being too cautious than too reckless, especially after the inflation headache we all lived through.
Now, over the next 10-20 years? That’s a different story. Economic cycles are real, and what goes up eventually comes down. If we hit a serious recession, see major demographic shifts as baby boomers age out of peak spending years, or face technological disruptions that fundamentally change how the economy works, we could absolutely see rates drop significantly. Japan spent decades with near-zero rates, and parts of Europe have experimented with negative rates. But here’s the thing—those scenarios usually come with their own set of problems, like economic stagnation or deflation, that make cheaper borrowing costs feel less like a gift and more like a consolation prize. So sure, rates could go lower in the long run, but you probably don’t want to experience the economic conditions that would make that happen.
Those magical 2.65% rates from 2020-2021? Yeah, that’s not likely to come back. The pandemic era was basically an economic fever dream. Even if rates do creep toward 6% by December (and that’s a big if), don’t expect them to go much lower. And honestly? They could just as easily head north if the economy decides to throw us another curveball.
Stop playing the waiting game. Four out of five homebuyers are sitting on the sidelines waiting for rates to fall, and a quarter want rates below 5%. Spoiler alert: it’s not happening. Here’s the kicker: while you’ve been waiting for that perfect rate, home prices have jumped 15% since early 2022. So you could wait another year for rates to maybe drop half a point, but home prices could easily climb another 5-10% in that time.
The era of basically-free money is over, at least for now. Most experts are calling for rates to average around 6.4% in 2025, and that’s probably our new reality for the foreseeable future. Instead of waiting around for some magical rate fairy to show up, focus on finding the best deal available right now and make a move that works for your actual life—not your fantasy life where rates magically drop to 3%. The housing market isn’t going to pause and wait for perfect conditions, and honestly, neither should you. Sometimes “good enough” really is good enough, especially when the alternative is watching prices climb while you’re stuck on the bench wondering what could have been.
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