Mortgage rates are still rising, getting close to 7%

As we head into 2025, mortgage rates appear headed back to 7%. Freddie Mac reports its Primary Mortgage Market Survey shows the 30-year fixed-rate mortgage (FRM) averaged 6.85% this week, increasing home affordable challenges.

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“Mortgage rates increased for the second straight week, rebounding after a decline from earlier this month,” said Sam Khater, Freddie Mac’s chief economist. 

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“While a slight improvement in new and existing home sales is encouraging, the market remains plagued by an overwhelming undersupply of homes. A strong economy can help build momentum heading into the new year and potentially boost purchase activity.”

While rates are expected to remain high next year, they may stay below 7% much of the time. An economic forecast from real estate marketplace Realtor.com suggests the 30-year fixed-rate mortgage will average 6.3% throughout the year.

While 6.3% is not historically high for a mortgage, the rate averaged 4% from 2013 to 2019. However, rates plunged to below 3% during the COVID-19 pandemic, causing home prices to skyrocket.

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Realtor.com expects home prices to continue rising in 2025, increasing by 3.7%. The shortage of available homes has not reduced demand, keeping prices elevated.