If you’ve been thinking about making a move in real estate, whether it’s buying your first home, refinancing your current mortgage, or signing a new lease, you’re not alone. Plenty of Americans are asking the same question: Is now the right time to act?
The answer isn’t easy. The mortgage market is complex, unpredictable, and heavily influenced by economic forces far beyond your control. Due to high inflation, mortgage rates have stayed elevated since 2022, and recent predictions from major financial institutions suggest they may not fall anytime soon.
But that doesn’t mean you’re stuck. It just means you need to approach the decision with clarity and evidence. In a market like this, financial success comes not from guessing what will happen next, but from understanding what’s happening now and how it impacts your personal goals.
The mortgage rate outlook is becoming increasingly pessimistic and volatile as we get further into the year. In May of this year, Fannie Mae predicted rates would be 6.1% by the end of 2025, but in June, their predictions for the end of the year increased to 6.5%. Also in June, the Mortgage Bankers Association forecasted a 6.7% rate by the end of 2025.
We’re living through a moment of major transition in both the global and domestic economy. Geopolitical tensions, changing trade policies, pressure from inflation, and uncertain regulations have all contributed to an unpredictable environment. For lenders, builders, and buyers alike, this means more risk, and with risk comes higher costs.
Even though the market has shown early signs of cooling in some areas, overall conditions are still tough for buyers. The longer rates stay high, the more pressure it puts on affordability, especially for first-time homebuyers or those with less-than-perfect credit. To make matters more complicated, factors like tariffs and taxes may lead to materials becoming more expensive, further increasing the cost of building or renovating homes. This could keep housing prices inflated even as other parts of the economy slow down.
Mortgage rates don’t rise and fall at random. They respond to a web of interrelated economic forces at the local, state, federal, and even international levels. Understanding what’s driving today’s rates can give you a clearer picture of where things might go next and help you make smarter choices in the meantime.
This is the interest rate banks pay to borrow money from one another overnight. While it’s not the same as mortgage rates, it has a major downstream effect: when the Fed raises this rate, borrowing becomes more expensive across the board, including for consumers. Right now, the Federal Funds Rate is holding steady at 4.25% to 4.5%, a level the Federal Open Market Committee (FOMC) has maintained since earlier this year. Since the broader economic picture is still murky, the Fed is wary of cutting rates too soon.
Specifically, the yield on 10-year Treasury notes. These government-backed bonds are seen as a benchmark for long-term interest rates. When yields rise, mortgage rates typically follow, as lenders must offer higher returns to attract investors. Treasury yields are currently elevated, reflecting investor uncertainty about inflation, global stability, and government policy.
Inflation eats away at purchasing power not just for consumers but for investors and lenders as well. If inflation is high, lenders demand more interest to compensate for the future value of money being eroded. The cumulative price change from 2020 to 2025 is 24.21%, which means everything across markets costs nearly a quarter more than it did only five years ago. While inflation has come down from its peak in 2021-2022, it’s still higher than the Fed would like and is keeping pressure on rates.
When people and institutions feel confident about the economy, borrowing and lending flow more freely. When there’s fear or doubt, credit tightens up. Right now, market sentiment is cautious at best. Between political uncertainty, global conflicts, and domestic policy shifts, many lenders are playing it safe, and that’s reflected in today’s higher rates.
Since March 2022, when the Federal Reserve began raising rates aggressively to combat inflation, mortgage rates have climbed and remained elevated. Though they’ve been relatively stable since April 2025, they’re still far above the historic lows seen during the pandemic.
The Federal Reserve is currently divided on whether or not rates will drop in 2025. While a majority of the FOMC expects to see at least a modest cut by the end of the year, a sizable minority believes there will be no cuts at all. The economic effect of the current administration’s changes to regulations and policy remains uncertain at this point, and Jerome Powell, the current Chairman of the Fed, may be replaced before his current term expires.
Meanwhile, as mentioned previously, mortgage rate projections are growing more uncertain and increasingly pessimistic as the year progresses. These adjustments reflect growing concern that inflation and market instability will keep rates higher for longer.
In a high-rate environment like this, buying a home or refinancing your mortgage can feel intimidating, and for good reason. However, there are still ways to move forward, especially if you use a thoughtful, evidence-based approach.
It’s easy to get caught up in market trends, but ultimately, your personal finances matter more than national averages. Take a good look at your income, savings, debt, and long-term goals. Can you afford to buy a home at today’s rates without compromising your financial stability? If the answer is no, waiting to buy may be the smarter move, even if rates go up again.
Right now, sellers still have the upper hand in many areas. That means bidding wars, limited inventory, and little room for negotiation. However, if the economy slows or a mild recession takes hold, buyers may gain a bit more leverage. It’s important to keep in mind that even if the economy slows, prices may not fall as much as you hope. Even in downturns, home values tend to hold relatively steady unless there’s a dramatic crash, which most experts don’t foresee.
At PFW Advisors, we encourage clients to think about financial decisions in terms of life alignment by using the Rational Finance framework. Ask yourself: What kind of life am I trying to build? Is homeownership essential to that vision? If so, what would it take financially, emotionally, and logistically to make it happen? Clarity here can help you move forward even when the external conditions feel chaotic.
It’s important to stay informed about interest rates, policy changes, and housing trends, but there’s a fine line between being aware and becoming overwhelmed. The sheer volume of financial headlines can cause decision paralysis or even anxiety. Give yourself permission to tune in just enough to stay grounded, and then focus on what you can control.
No one can predict exactly what mortgage rates will do tomorrow, next month, or next year, but you don’t need a perfect forecast to make a smart move. All you need is a clear view of your own financial landscape and goals. Regularly evaluate and re-evaluate what your ideal life means to you, and whether buying a home is a necessity. If it is, then take some time to clearly define what it would take for you to achieve that milestone.