Will Mortgage Interest Rates Drop In 2025. The federal reserve is expected to cut rates further in 2025, paving the way for slightly lower borrowing costs for consumers. Overall, the mba now expects mortgage rates to be 30 basis points higher in 2025 and 20 basis points higher in 2026 than in its previous outlook.

Reduced inflation could prompt the federal reserve to finally cut. With lower rates, borrowing money will cost less, saving buyers.