Mortgage rates haven’t exactly been affordable lately. The average 30-year mortgage rate has hovered between 6% and 7% for the bulk of the last two years. At one point, it even reached as high as 7.79% — the highest point in decades, according to Freddie Mac.
It’s a far cry from the bargain-basement rates we saw in the height of the COVID-19 era, when rates bottomed out at a mere 2.65%, the lowest ever recorded. Those ultra-low rates were likely a once-in-a-lifetime occurrence, borne from the Federal Reserve’s need to spur economic activity after widespread shutdowns. However, that doesn’t mean mortgage rates are stuck at today’s higher levels forever.
Just when will they drop back down below 6%, though? And should you wait for 6% rates before buying a house? Here’s what you can expect.
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Read more: Historical mortgage rates — How do they compare to current rates?
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To understand just how much today’s higher rates impact buyers and borrowers, it’s important to consider home prices, which have been rising steadily for years.
Right now, the median home price sits at $416,900, according to Census data. At a 6.81% mortgage rate — the average for a 30-year term as of June 18 — you’d pay about $2,720 per month on a median-priced home.
And that’s just the mortgage principal and interest. It doesn’t even factor in homeowners insurance, mortgage insurance, or property taxes, which also make up your monthly mortgage payment.
Over one year, that’s more than $32,600 — accounting for over half of the country’s median annual earnings. (Generally speaking, you shouldn’t spend more than 25% to 35% of your income on housing costs.)
Assuming you’re getting a 30-year loan term, here’s a look at what you’d expect to pay at various interest rates for a median-priced home ($416,900) today:
As you can see, the difference between a sub-6% rate and today’s rates is pretty significant. Interest rates have been hovering just below 7% for a while. In this scenario, the difference between a 7% rate and a 6% rate would be $274 per month or $3,288 annually.
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Fortunately for borrowers, mortgage rates are largely expected to decline this year — at least a little bit. In its June Housing Forecast, Fannie Mae projected a 6.6% average by the end of the third quarter and 6.5% by year’s end.
The Mortgage Bankers Association (MBA), a trade organization, is more conservative in its predictions. In June, the MBA forecasted a 6.7% rate by the end of 2025 — down just slightly from today’s 6.81% average.
So, while interest rates should inch closer to 6% in 2025, we might not see them hit 6% until 2026.
Rates’ direction will depend heavily on inflation and the Federal Reserve’s response to it. According to the central bank’s economic projections, it expects to cut the federal funds rate two times this year.
“I would expect mortgage rates to stay in the current range until we see what direction inflation is heading,” Jennifer Beeston, executive vice president of national sales at Rate, said via email.
The next Consumer Price Index (CPI), a key measure of inflation, will be released in mid-July, and the Fed will meet later that month. If the Fed decides to cut rates, the decrease would likely trickle down to mortgage rates too, but borrowers shouldn’t expect any drastic drops.
“Home buyers can reasonably expect mortgage rates in the 6.5% to 7% for the rest of 2025,” Jeff Taylor, an MBA board member and founder and managing director at Mphasis Digital Risk, said via email.
Dig deeper: How the Federal Reserve impacts mortgage rates
Looking further out, mortgage rates — at least on conventional loans — probably won’t fall under 6% until 2026 or later.
“In order for conventional mortgage rates to hit below 6%, we need to see a reduction in inflation as well as increased confidence in the continued containment of inflation, which is hard to currently envision given the macroeconomic and geopolitical outlook,” Beeston said.
Aside from tamped-down inflation, Taylor said unemployment would need to rise too.
“This would prompt the Fed to cut,” he said. “Global investors would also need to prove their belief in U.S. Treasury and mortgage bond safe-haven trades if geopolitical conflicts keep escalating, which would push bond yields up and mortgage rates down.”
Two factors also make things even more unpredictable: a potential replacement for Fed Chairman Jerome Powell mid-next year and the long-term impacts of Trump administration tariffs.
“Sub-6% rates are unlikely until we see the inflation impacts of tariffs,” Taylor said. “But rates in the 6% to 6.5% range are possible ahead of the Fed leadership switch in May 2026.”
As of its June 2025 forecast, Fannie Mae expected rates to end 2026 at 6.1%. The MBA currently has no sub-6% projections on its 2025 or 2026 forecasts, either.
Learn more: How does inflation affect mortgage interest rates?
Though significantly lower mortgage rates aren’t on the horizon anytime soon, there are still steps you can take to make getting a mortgage more affordable. Here are some tips for getting the lowest mortgage rate possible:
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Improve your credit score: A higher credit score generally qualifies you for lower interest rates, as it indicates you’re a lower risk of defaulting on your mortgage.
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Make a bigger down payment: When you make a larger down payment, your mortgage lender has less money on the line. The company may reward you with a lower interest rate in return.
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Get a rate buydown: Mortgage interest rate buydowns allow you to pay a fee to temporarily reduce your interest rate, usually for the first few years of the loan.
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Buy points: Mortgage discount points lower your interest rate for your entire loan term, but you’ll pay an up-front fee. You’ll pay these fees at closing.
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Shop around: You can also compare loan quotes from several mortgage lenders. Freddie Mac estimates that getting quotes from at least four lenders can save you around $1,200 annually.
You can also explore a shorter loan term or an adjustable-rate mortgage, which may offer lower rates than the traditional, 30-year fixed-rate mortgage.
If you’re otherwise ready to buy a home but are holding out for lower mortgage rates, it might not be worth the wait. Interest rates probably won’t plummet anytime soon. And remember, you can always buy a house now to start building equity, then refinance into a lower interest rate later.
The Mortgage Bankers Association projects a year-end average rate of 6.7% on 30-year mortgages. Fannie Mae forecasts an average of 6.5% by the end of 2025.
Neither Fannie Mae nor the Mortgage Bankers Association predicts that mortgage rates will fall under 6% in 2025 or 2026. Many factors could change those projections, though, including Federal Reserve moves, inflation, tariffs, and employment data.
It is unlikely that mortgage rates will fall as low as 3% again. While this did happen in the post-pandemic years, it was largely due to the Federal Reserve’s need to spur economic activity after widespread shutdowns across the nation.
Laura Grace Tarpley edited this article.
