Mortgage Rates in 2025

The Federal Reserve paused its rate-cutting cycle in early 2025, with the federal funds rate at 4.25–4.5%. Stubborn core inflation and resilient employment gave the Fed reason to hold steady. Markets expected 1–2 additional cuts by year end.

CPI remained near 3% in early 2025, above the Fed's 2% target. Tariff-driven goods price increases offset the continued cooling of shelter costs.

Mortgage rates averaged approximately 6.84% year-to-date. Housing inventory slowly improved from COVID-era lows, but affordability remained near multi-decade lows in most major markets. New construction activity picked up to fill the supply gap.