Weekly Mortgage Rate Predictions for March 3-9, 2025

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Mortgage rates have fallen more than a quarter of a percentage point (0.25%) since mid-January. The average rate on a 30-year fixed mortgage is around 6.75%, down from 7.13% just six weeks ago, according to Bankrate data.

While that's a welcome change that makes mortgage rates a little better, "it doesn't make them especially low or attractive," said Keith Gumbinger, vice president at HSH.com.

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Plus, even if lower rates are good for housing affordability, the reasons behind the recent dip -- namely, a weaker job market and higher inflation -- aren't beneficial for most US households.

"The economic picture is shaky," said Erin Sykes, founder of real estate company Sykes Properties.

Mounting concerns that the Trump administration's tariff proposals, federal layoffs and tighter immigration policies could reduce economic growth have driven bond yields down. The popular 30-year fixed-rate mortgage is closely tied to the 10-year Treasury note, so lower bond yields translate to lower borrowing costs for homebuyers.

Housing giant Fannie Mae expects average mortgage rates to remain above 6.5% for most of the year. But if new data points to longterm economic distress, mortgage rates could hit that target earlier than expected, according to Gumbinger. "There's a great bit of uncertainty in the outlook at the moment," he said.

With the spring homebuying season fast approaching, prospective homebuyers are left at a familiar crossroads: Jump into the market now or stay on the sidelines?

What's impacting mortgage rates this week?

The key economic factors affecting rates this week are February's employment report, which will be released this Friday, and global trade pressure around tariffs. Both have the potential to shift bond yields and drive mortgage rates up or down.

"If the labor data shows more weakness and inflation moderates, we could see rates fall sooner, but it's not a given," said Sykes.

Trump's threats to place sweeping tariffs on imports from Canada, Mexico and China have economists worried about an uptick in prices being passed to consumers. In addition to increasing the cost of household goods, tariffs may drive up the cost of lumber and building materials used to construct new homes.

The big question is how new data and fiscal policies will influence the Federal Reserve's decisions about when to resume cutting interest rates. After inflation showed ongoing signs of slowing in late 2024, the Fed lowered rates three times, yet the picture is proving to be far more complex this year.

Most economists and analysts are pricing in two Fed rate cuts this year, with the first coming as early as June, especially if unemployment increases. But if inflation remains stubbornly high, the central bank could delay any rate cuts until later this year. While the Fed doesn't directly set mortgage rates, its policy decisions affect the direction of borrowing costs across the economy.

Will mortgage rates fall in 2025?

Mortgage rates move up and down daily in response to a range of factors, including economic data, decisions on monetary policy and investor expectations. Aside from day-to-day fluctuations, mortgage rates are expected to stay between 6.5% and 7% for a while. But changes in the geopolitical outlook, the risk of inflation rebounding and increasing unemployment could all impact mortgage forecasts over the coming months.

Today's rates seem high compared with the 2% rates of the pandemic era, but experts say rock-bottom rates are unlikely without a severe economic downturn. Since the 1970s, the average rate for a 30-year fixed mortgage has been around 7%.

Expert tips for homebuyers

It's never a good idea to rush into buying a home without knowing what you can afford, so establish a clear home-buying budget. Here's what experts recommend before purchasing a home:

💰 Build your credit score. Your credit score will help determine whether you qualify for a mortgage and at what interest rate. A credit score of 740 or higher will help you qualify for a lower rate.

💰 Save for a bigger down payment. A larger down payment allows you to take out a smaller mortgage and get a lower interest rate from your lender. If you can afford it, a down payment of at least 20% will also eliminate private mortgage insurance.

💰 Shop for mortgage lenders. Comparing loan offers from multiple mortgage lenders can help you negotiate a better rate. Experts recommend getting at least two to three loan estimates from different lenders.

💰 Consider renting. Choosing to rent or buy a home isn't just comparing monthly rent to a mortgage payment. Renting offers flexibility and lower upfront costs, but buying allows you to build wealth and have more control over your housing costs.

💰 Consider mortgage points. You can get a lower mortgage rate by buying mortgage points, with each point costing 1% of the total loan amount. One mortgage point equals a 0.25% decrease in your mortgage rate.