Mortgage Rates Stay High Despite Fed's Rate Cuts

Federal Reserve rate cuts in 2024 have not eased mortgage costs, with rates expected to remain elevated into 2025 due to economic factors.

The Federal Reserve has cut interest rates three times in 2024, but mortgage rates have risen, with the average 30-year fixed rate now hovering between 6.5% and 7%.
Mortgage rates are more closely tied to long-term Treasury yields, which have increased due to economic uncertainty and the Fed's forecast of fewer rate cuts in 2025.
The housing market remains constrained by high borrowing costs, low inventory, and record home prices, with 2024 poised to be the worst year for home sales since 1995.
Experts predict that mortgage rates may decline modestly in 2025 but are unlikely to return to the historic lows of 2–3% seen in 2021.
The Fed's quantitative tightening policy, which reduces its holdings of mortgage-backed securities, continues to exert upward pressure on mortgage rates.