MBA changes mortgage rate forecast for 2025
The housing sector expected mortgage rates to fall in 2025. Then Donald Trump was elected president and the Fed raised doubts about how much – and how quickly – interest rates would be cut.
The latest sign that views on interest rates are changing comes from the Association of Mortgage Bankers (MBA), which has released its monthly mortgage financing forecast. MBA now expects mortgage rates to be between 6.4% and 6.6% in 2025, while remaining stable at 6.3% in 2026.
In October, amid more optimism about the pace of Fed rate cuts, the trade body forecast rates would be between 5.9% and 6.2% in 2025 and 5.9% in 2026.
In the November forecast Fannie Mae has also revised its expectations regarding mortgage rates. The country previously predicted that mortgage rates would fall below 5%, but now expects rates of 6.3% in 2025 and above 6% in 2026.
MBA’s November forecast includes other changes in other housing activity that would be affected by higher mortgage rates. It expects mortgage volume to reach $2.1 trillion by 2025, while its October forecast predicted volume of $2.3 trillion.
Additionally, MBA’s updated forecasts predict slightly lower home sales in 2025, with existing home sales at a seasonally adjusted annual rate of 4.25 million, as opposed to October’s forecast, which predicted 4.3 million. The change in the projection for new home sales in the updated forecast is negligible.
from HousingWire The housing market forecast for 2025 assumes 4.2 million existing home sales, just like that of Goldman Sachs. Of the forecasts that HousingWire analyzed, the National Association of Real Estate Agents has the highest forecast at 4.9 million.
MBA is not the only forecast that is lowering home sales. Fannie Mae has lowered its expectations for home sales growth in 2025 from 11% to 4%.
After a summer in which both 15- and 30-year conforming mortgage rates were around 7%, mortgage rates fell significantly and bottomed out in early October. The 15-year compliance rate dropped to mid-5% and the 30-year compliance rate fell below 6.5%.
However, interest rates rose dramatically in October and both the 30- and 15-year rates are around 7%.
The Federal Reserve He was expected to make several rate cuts in the coming months, but Trump’s election is clouding that outlook because of his rate proposals. At various points in the 2024 campaign, Trump proposed a 10% across-the-board tariff on foreign goods, a 60% tariff on Chinese goods, and a 100% tariff on Mexican goods.
Economists widely believe that rates of this magnitude would reignite inflation and force the Fed to suspend interest rate cuts, or even prompt them to increase them.
