What if mortgage rates don’t hit 5%?

Fannie Mae and the Mortgage Bankers Association (MBA) released their monthly updated forecast for mortgage rates through 2025. This June update no longer shows predicted rates for the 30-year fixed conforming to hit the 5% range. MBA, who tends to be the most optimistic, forecasts that in the 4th quarter of 2025, we’ll see 6.0% for a rate with the homes of 5.8% in 2026.

Should you hold out on Fannie Mae and MBA’s forecast for lower rates in two years? It depends.

I’m still of the opinion that if you can find the home that you want and you can afford it, AND you plan on retaining it for at least a couple of years, that you should buy now. Why? In our region, home prices are still trending higher. If rates remain in the 6% range OR if these forecasts are completely off, the same home you could buy now will likely be more expensive in price and interest rate. If you were to buy now instead of two years from now, you have the opportunity to pay yourself each month with your mortgage payment going towards paying down the balance instead of paying a landlord and you also have the added benefit of the appreciation starting now instead of two years from now.

I created a Cost of Waiting report that compares buying now vs waiting two years. I used an average of Fannie Mae’s and MBA’s current forecasted rates based on buying a home currently listed at $800,000 in the Renton area using a 5% down payment, 30-year fixed-rate mortgage and factoring forecasted appreciation.

SPOILER ALERT: this report illustrates that if someone were to buy now, instead of waiting until 2026 for the possibility of a rate in the upper 5% range, they would be financially better off by almost $80,000! The difference in the principal and interest portion of the mortgage payment is around $10-$11 despite using a forecasted rate under 6% because it’s based on a higher appreciated sales price and loan amount.

Check out the video below where I review the Cost of Waiting report.

And yes, if/when rates come down to the 5% range, of course you can refinance… but what if they don’t? In our area, due to the lack of inventory, home prices are not anticipated to come down – it’s predicted they will continue to trend higher. The same house you have your eyes on today will most likely cost more tomorrow and will either have a lower rate (which may not pencil out as you’ll see in the video) or will have the same rates as we do now… or possibly a higher rate and higher payment. That’s why I feel that IF you can afford to buy now that you should seriously consider it. Do the math and make an informed decision. I’m happy to help you!

If you’re considering buying a home and would like me to provide a report for you, please reach out!


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