Mortgage Rates Edge Back Toward 7% as Housing Market Faces Challenges

Despite recent Federal Reserve rate cuts, mortgage rates remain elevated, impacting homebuyers and sellers in early 2025.

The average 30-year fixed mortgage rate held at 6.99% this week, nearing the 7% mark after steady increases over the past three months.
Economists attribute rising mortgage rates to factors like Federal Reserve policies, bond market trends, and lender competition, despite three Fed rate cuts in late 2024.
Higher rates have led to reduced buyer activity, with monthly payments for a $400,000 loan now averaging nearly $2,700, excluding taxes and insurance.
Limited housing supply, driven by seller reluctance to list properties with lower locked-in rates, continues to constrain options for buyers.
Experts predict gradual rate moderation and increased housing inventory later in 2025, potentially improving conditions for buyers and sellers alike.