Why Mortgage Rates Are Likely to Stay Higher Than Expected — And What That Means for Buyers and Sellers
As of June 25, 2025, Fannie Mae has adjusted its mortgage rate forecast — and it’s not the news many were hoping for. Their latest projection now shows 30-year fixed mortgage rates hitting 6.5% by the end of 2025, up from a previous forecast of 6.1%. Even heading into 2026, the outlook remains higher than originally expected, with rates predicted to settle at 6.1%, rather than the earlier forecast of 5.8%.
So, what’s driving these changes — and what does it mean if you're considering buying or selling a home?
Why the Upward Revision?
Fannie Mae attributes the shift to several persistent factors:
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Rising 10-year Treasury yields, which strongly influence mortgage rates
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Continued economic uncertainty, including sticky inflation data
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Mounting geopolitical tensions, keeping financial markets on edge
These elements are combining to keep mortgage rates elevated — even as many Americans were hoping for some relief this year.
What This Means for the Housing Market
Let’s break it down:
1. Home Sales Remain Constrained in 2025
Fannie Mae now expects existing home sales in 2025 to total 4.14 million units, down slightly from their earlier projection. This continues to reflect the lock-in effect, where homeowners with ultra-low interest rates are holding tight — choosing not to sell and lose their favorable terms.
2. Recovery Is Pushed to 2026
The rebound is now forecast for 2026, with existing home sales expected to rise to 5.68 million units. That improvement hinges on modest rate declines and improving buyer confidence.
3. Mortgage Originations Will Grow — Eventually
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2025: Single-family mortgage originations are expected to hit $1.90 trillion
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2026: A projected jump to $2.28 trillion as both buyers and sellers re-enter the market
What Should You Do with This Info?
If You’re a Buyer:
Waiting for 5% mortgage rates may not be the most realistic plan anymore. Focus on affordability now — and remember, you can always refinance later. Consider locking in a home at today’s price before competition heats up again in 2026.
If You’re a Seller:
If you’ve been holding off, now may be the time to strategize. Even with fewer buyers in the market, inventory remains low — and that gives you pricing power. Positioning your home well and marketing strategically still matters more than ever.
If You’re an Investor or Planner:
Keep your eye on the big picture. Real estate remains a long-term game, and timing the market perfectly is nearly impossible. These forecasts are just that — forecasts — and they can shift quickly based on new economic data.
Final Thoughts
Yes, mortgage rates may be higher for longer. But the housing market is always evolving. Staying informed — and working with professionals who understand both the numbers and the nuances — is your best advantage.
If you're curious how today's rates impact your buying or selling plans in Highlands Ranch, Denver, or anywhere in the South Metro area, let’s connect. I’d be happy to help you run the numbers, make a smart move, and build your wealth — no matter what the market throws our way.
