Overview

• 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.