Most of 2025 has seen a pretty flat real estate market when compared to 2024.
Lack of inventory, rising home prices and high mortgage rates have all played a role in keeping the market from taking off. However, for the last few weeks, mortgage rates have seen a steady decline: from nearly 7% to about 6.25%.
“They’ve been uncomfortably high for most buyers most of this year,” said Holden Lewis, a home and mortgage expert for NerdWallet. “The difference is, in the last three or four weeks, mortgage rates have been falling. What you’re seeing is, most mortgages a 30-year loan, you get between about six and a quarter percent and six and a half percent,” he said.
What You Need To Know
Interest rates and mortgage rates are not the same thing, but what the Federal Reserve does can impact your ability to secure financing for a home
There are several different kinds of mortgages, but the adjustable-rate mortgage is becoming popular again
The No. 1 thing to do when considering buying a home is to get pre-approval so that you know how much money you have to spend in order to set epectations
Another factor into those interest rates to keep an eye on is the Federal Reserve. While that body does not set the rates for mortgages, it is one of the factors that lenders consider when setting the percentage you pay when purchasing a home. For the most part, mortgage rates tend to follow the 10-year Treasury yield, which is mostly impacted by overall economic health. So rate cuts at the Fed might not mean rate cuts for mortgages.
“Now there is this idea that the Fed might cut at the next two meetings, the two meetings remaining this year, and that does not guarantee that we’re going to see mortgage rates go down,” Lewis said. “And here’s why: These rate cuts could cause inflation to rise. And if the mortgage market is worried that inflation will start zooming up again in the next few years, then … you might not see mortgage rates fall much further.”
Lewis also said the current drop in rates is still not likely enough to really spur the market into more movement. If, however, they fall below 6%, like some experts believe they will in 2026, then you could see things become more advantageous for buyers.
One mortgage product that is gaining steam lately is the adjustable-rate mortgage, or ARM. It fell out of favor after the housing bubble burst in 2008 but is once again becoming a popular option for folks who know they won’t be in their homes for more than a few years before moving.
No matter what kind of loan you ultimately end up with, being pre-approval for it will help you in the long run.
“Knowing exactly the price range, knowing what your upper limit is, it really does help you,” Lewis said. “When you’re searching for a home, you’re not wasting your time looking at houses that you really like. You make an offer, and then you discover, ‘Oh, I can’t quite afford this.’ No one wants to get into that position. So, you know, applying for a mortgage upfront is a really good idea.”