Published September 8, 2025
Interest Raates
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Interest rates will continue their moderate downward trend in late 2025, though not drastically, with forecasts for the 30-year fixed mortgage rate to be in the mid-6% range by year-end.
The Federal Reserve is expected to begin cutting its policy rate in the second half of the year due to a weakening labor market and contained inflation, which will translate to lower bond yields and mortgage rates, though a return to pre-pandemic low rates is unlikely.
Factors influencing interest rates in late 2025:
The Federal Reserve is expected to begin cutting its policy rate in the second half of the year due to a weakening labor market and contained inflation, which will translate to lower bond yields and mortgage rates, though a return to pre-pandemic low rates is unlikely.
Factors influencing interest rates in late 2025:
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Economic Conditions:A softening labor market and moderating inflation are key factors suggesting potential Fed rate cut
Federal Reserve Policy: -
The Fed's policy rate is expected to be cut, which influences broader borrowing costs.
Bond Market Activity: -
Bond investors' reaction to recession fears and safe-haven investments in Treasury bonds will directly impact mortgage rates.
Geopolitical Uncertainty: -
Unforeseen global events can contribute to higher baseline rates.
Specific Forecasts:
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30-Year Fixed Mortgage Rate:.Expected to fall from the 6.6%-7.1% range seen earlier in the year to the mid-6% range by the end of 2025, averaging around 6.4% to 6.75%.
Fed Funds Rate: -
.Projections indicate the Fed will resume cutting its benchmark rate, potentially leading to three cuts in 2025 and bringing the rate to approximately 3.5-3.75% by year-end
Treasury Yields:
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Moderate Relief:Borrowing costs will likely be lower than in the past year but still elevated compared to the pandemic era.
Opportunity for Refinancing: -
With rates trending down, more homeowners may have the chance to refinance their mortgages.
Focus on Other Factors: -
Consumers should still focus on maintaining good credit, saving, and paying down debt, as financing costs will remain comparatively high
