Economists caution that forecasts for interest rates on mortgages come with more uncertainty than usual due to Trump administration policies on tariffs and other issues.
By the second quarter of 2025, more than 50% of mortgages could hold interest rates higher than 4%, according to Mat Ishiba, chairman and CEO of United Wholesale Mortgage.
Some 17.2% of homeowners with mortgages had an interest rate greater than or equal to 6% at the end of the third quarter of 2024, compared to 12.3% in the third quarter of 2023.
Originations of first liens increased slightly in the fourth quarter. For the full year, production was up nearly 15% compared with 2023 as lower interest rates helped to boost lending. (Includes two data tables.)
Following a strong jobs report, many economists now expect the Fed to keep rates unchanged. Also, concerns about policies from the Trump administration are helping to drive up the 10-year Treasury rate.
The increase in the 10-year Treasury rate following the November election and changes in expectations for interest rates have prompted economists to revise down their projections for originations in 2025.
The National Consumer Law Center is urging states to restrict the annual percentage rate at 36% for loans with balances of up to $1,000 and lower limits for larger loans.
Prepayment rates during the recent dip in mortgage rates were higher than expected, suggesting lenders have extra staff on hand. Still, it could be a while before interest rates fall low enough to significantly boost lending.