Mortgage rates are expected to remain steady for the majority of March, with a potential increase following the conclusion of the Federal Reserve’s rate-setting meeting on March 19. It is unlikely that there will be a short-term interest rate cut in the first half of the year, which may disappoint some individuals.
Despite the gloomy rate outlook for home buyers in March, there are some positive aspects to consider. The housing market offers a wider selection of homes, prices are increasing at a slower rate, and a significant portion of homes on the market have experienced price reductions.
In essence, it’s not all doom and gloom.
What’s the current situation with mortgage rates?
The 30-year mortgage rate has remained above 6.75% throughout 2025 due to persistently high inflation rates. Lenders typically offer rates above the inflation rate, resulting in elevated mortgage rates during times of high inflation.
Inflation reached its peak in mid-2022 at 9%, prompting the Federal Reserve to raise the overnight federal funds rate. While inflation has since decreased, remaining above the Fed’s target of 2%, the central bank has maintained its current stance on rates since December.
What actions will the Federal Reserve take?
While it is unlikely that the Federal Reserve will lower rates at the upcoming meeting in March, market observers anticipate rate cuts later in the year. Fed Chair Jerome Powell and other officials have emphasized the importance of carefully assessing the need for rate adjustments, indicating a cautious approach to future rate cuts.
With potential delays in rate cuts, mortgage rates may see an upward trend following the March meeting, impacting market expectations and buyer decisions.
Positive indicators for the housing market
Despite the challenges posed by mortgage rates, there are promising signs for home buyers. There is an increasing supply of homes for sale, with both existing and new homes becoming more accessible to buyers. Additionally, home price growth appears to be stabilizing, offering some relief to potential buyers.
Furthermore, a notable number of home sellers are adjusting their prices to attract buyers, indicating a potential shift in the market dynamics. While overall prices remain steady for now, continued high mortgage rates could lead to price adjustments in the future.
Forecasts from industry experts
The Mortgage Bankers Association and Fannie Mae anticipate that the 30-year mortgage rate will hover around 6.9% in the first quarter of 2025, reflecting the current trend observed in the mortgage market. Stability in rates is expected in the coming months, barring any significant changes in economic conditions.
Review of February’s forecast and outcomes
Previously, it was suggested that mortgage rates could experience a slight decline in February following a period of stagnation. This prediction came to fruition, as the average 30-year mortgage rate decreased from January to February, as reported by Freddie Mac’s survey.