In 2021, the average 30-year mortgage rate fell below 3%, but now, according to Freddie Mac, it’s well over 6.5%. If you’re in the market for a mortgage loan, you may be wondering if you should wait until interest rates fall significantly before buying a house. When will mortgage rates finally drop back down near the 3% mark?

Read more: Is 2025 a good time to buy a house?

In 2020 and 2021, Americans witnessed record-low mortgage rates. The lowest 30-year fixed rate was 2.65% in January 2021, but rates hovered at or below 3% for roughly a couple of years. However, home loan rates probably won’t drop back down to 3% — at least not anytime soon.

To grasp why rates are unlikely to return to 3%, it helps to understand two things: the circumstances that initially drove the drastic drop in interest rates and the factors behind today's higher rates.

Learn more: What determines mortgage rates? It’s complicated.

Home loan interest rates reached historic lows in 2021 as the Federal Reserve aggressively cut rates to mitigate the effects of the COVID-19 pandemic.

The pandemic impacted the economy in several ways, including widespread unemployment and supply shortages. To encourage spending and avoid a major recession, the Fed began lowering the federal funds rate in March 2020, making it cheaper to borrow money as Americans faced job losses.

Although many factors influence home loan rates, mortgage rates typically follow the general direction of the federal funds rate. And by late December 2020, the average rate for a 30-year mortgage was even lower than 3% at 2.66%.

Dig deeper: How the Federal Reserve rate decision affects mortgage rates

Lower interest rates and pandemic-relief stimulus programs increased consumer demand, one of several factors that drove the inflation rate.

The Federal Reserve monitors this rate, which measures the price change for goods and services, aiming to keep it around 2% according to yearly changes in the price index for personal consumption expenditures (PCE).

By 2022, the PCE inflation rate was over 5%, and the Fed began a series of fed funds rate hikes to curb it. The central bank raised its rate 11 times combined in 2022 and 2023. Mortgage rates followed suit, peaking at 7.79% in October 2023 before hovering around 6.6% at the end of the year.

Many experts expect 30-year mortgage rates to stay above 6% in 2025, anticipating a slight drop if they fall at all. Rates may decrease more in 2026, but economists still expect them to remain above 6% next year.

Whether we see lower rates depends on several economic factors. Here are just a few.

Inflation: Higher inflation can lead to higher mortgage rates if the Federal Reserve responds with a rate hike or even by keeping the fed funds rate unchanged.

Unemployment: High unemployment can cause demand for homes to fall, which could lead to lower mortgage rates.

10-year Treasury yield: Mortgage rates tend to follow the direction of the 10-year Treasury yield. Unlike the fed funds rate, the 10-year yield is a greater indicator of rates on longer-term loans — like home loans. Generally, investors buy more Treasury bonds as a safety net during economic uncertainty, which lowers yields and, ultimately, mortgage rates.

Keep reading: When will mortgage rates go back down to 4%?

Buying a home generally makes more sense when it fits your budget and goals than if you try to time the real estate market.

"Finding the right time to buy is not a science, and there are a lot of factors beyond just rates buyers should consider,” Beverly Hankinson, mortgage loan advisor manager at Frost Bank, said via email. “A term that’s become popular is, 'date the rate, marry the house.' If the home checks all your boxes, buying could make sense, especially if you can refinance in the future."

Current homeowners should factor in more than the interest rate when considering a mortgage refinance.

"If you are currently locked into a higher mortgage rate, it could be a good opportunity to explore a refinance,” noted Hankinson. “However, refinancing comes with a cost, so it’s important to weigh your monthly savings against other factors, including how long you plan to stay in your home. For example, if you plan to move for more space in the next two to three years, it might not make sense to pay the refinancing costs."

Dig deeper: Do mortgage rates go down during a recession?

Although you can’t control when mortgage rates fall, there are steps you can take to ensure you get the lowest mortgage rate possible.

Boost your credit score: You’re more likely to get a lower interest rate with a higher credit score. Improve your score by making on-time payments on credit cards and other debts and resolving errors on your report.

Pay down debt: Reducing your debt lowers your debt-to-income ratio (DTI ratio), a factor mortgage lenders consider when determining your loan eligibility and what rate you qualify for.

Compare multiple lenders: Apply for preapproval with more than one mortgage lender to compare interest rates, repayment terms, and discounts.

Negotiate fees: Pay attention to closing costs and ask your loan advisor if there’s an opportunity to waive or reduce some fees.

Learn more: You locked in a low mortgage rate. Now you want to move — What should you do?

It’s unlikely you’ll see a 3% mortgage rate anytime soon. According to Freddie Mac, the average interest rate on a 30-year fixed-rate mortgage is well over 6%. Mortgage rates hit historic lows in 2021 due to the Federal Reserve’s response to the COVID-19 pandemic.

Some experts say mortgage rates could fall slightly in 2025, but don’t expect a significant drop in 30-year fixed-rate mortgages, which have lingered between 6% and 7% since the fall of 2022.

Timing the housing market can be difficult, especially when so many factors go into buying a home or refinancing. Generally, you should buy a house when you find the right one and it makes financial sense — you have enough saved for the down payment and can afford the monthly mortgage. Refinance when you can lower your interest rate or land better loan terms, like moving from an adjustable-rate to a fixed-rate mortgage.

This article was edited by Laura Grace Tarpley.

Mortgage interest rates change daily, meaning the mortgage interest rate you see when you first apply for your mortgage preapproval or approval may not be the same rate you end up with at closing. That’s why mortgage rate locks exist. Simply put, a mortgage rate lock freezes your interest rate until the loan closes and protects you from rising rates.

Mortgage rates have been fairly steady lately. Sure, they may increase one day and inch down the next — but there haven’t been drastic drops or spikes. When rates are stagnant, is it a good idea to lock in your mortgage rate? Or should you hold off?

Learn more: Strategies for getting the lowest mortgage rates

In this article:

What is a mortgage rate lock?

When to lock in a mortgage rate

How long can you lock in a mortgage rate?

Pros and cons

How to lock in a mortgage rate

Should I lock in my mortgage rate?

Lenders with unique rate lock programs

FAQs

A mortgage rate lock is a commitment from a mortgage lender guaranteeing that the interest rate on your home loan will remain the same until the day you close on the house — provided the mortgage closes within the specified time frame and there are no changes to your loan application. With a mortgage rate lock, the home buyer can keep the lower rate even if market rates go up.

However, if rates go down when you close on the mortgage loan, you could be stuck with a higher rate. A float-down option takes away that risk. Some mortgage lenders offer rate locks with float-down options, so you can still get a new rate if mortgage rates dip below your rate lock. It typically isn't free, though, and most lenders will charge you 0.5% to 1% of the loan amount. It will only make financial sense to exercise a float-down option if rates drop low enough to justify the cost.

The answer to when you can lock in your rate depends on the mortgage lender. Typically, you can lock in a mortgage rate at any time after you’ve been approved for the home loan and up to five days before closing. A lender might include a rate lock in the Loan Estimate, which it provides within three days before closing. Some lenders allow you to lock in a rate at other times, such as when you are preapproved.

But with all of these options, when exactly should you lock in a rate? The short answer is: Pay attention to market dynamics.

If interest rates have been stable, locking in your rate early may not be necessary. If rates are falling and are likely to continue in that direction, you may want to wait a bit before locking the rate, since you could get a better rate in a few weeks.

However, if interest rates are rising or unpredictable, and you’re worried you won’t be able to afford your mortgage with a higher interest rate, it’s worth doing a mortgage rate lock as soon as possible.

Current mortgage rates fall into that first category: stable (well, relatively). So, you may not need to rush to lock in your rate today. However, rate trends have been unpredictable overall in 2025. Keep an eye on rates, and if they start to trend upward, feel free to lock in a rate with a lender.

Dig deeper: How much house can I afford? Use the Yahoo Finance affordability calculator.

Depending on the lender, you can typically lock in a mortgage rate for 30, 45, or 60 days — sometimes even longer. As long as you close within the specified time frame, your mortgage rate won’t change.

But if your rate lock expires before you close on the loan, you’ll have to pay a fee to extend the period of time. The interest rate lock extension fee is typically a percentage of your loan amount. The longer the extension, the higher the cost.

Read more: 6 tips for choosing a mortgage lender

If you’re unsure whether locking in your mortgage rate is the right move, weigh these pros and cons to help you make an informed decision.

Protects you from interest rate hikes

You can typically choose from various lock periods, such as 30 or 60 days

Gives you peace of mind

Makes it easier to budget for your home and monthly payments since your interest rate is set

You could miss out on a lower interest rate if you don’t have a float-down option

You may have to pay extra to extend the lock after the expiration date

Many lenders charge rate lock fees

Learn more: What determines mortgage rates?

A mortgage rate lock can be helpful if market rates are trending up before your closing date. Take the following steps to lock in your mortgage rate:

Shop around. Before locking in your mortgage rate, submit mortgage preapproval applications with at least three different mortgage lenders so you can compare potential offers. Besides interest rates, you’ll also want to compare things like down payment requirements, origination fees, rate lock periods, and float-down options.

Find a home and make an offer. While many lenders allow you to lock in the mortgage rate any time after you’ve been approved for the home loan and up to five days before closing, you may have to pay extra to extend the lock if the rate lock expires before your loan closes. So, it might be best to start house-hunting and make an offer on the home you want before locking in a rate.

Contact your lender. When you’re ready for a mortgage rate lock, reach out to your lender to select the mortgage rate lock period you want and fully understand your options.

Learn more: How long does it take to close on a house?

We don’t have a crystal ball to tell you when mortgage rates will go down or whether it’s a good idea to lock in your mortgage rate today. Mortgage interest rates will likely decrease slightly in 2025, but not drastically.

Also, rates on mortgage loans aren’t moving much right now due to the political and economic climate. You may not feel the need to lock in a mortgage rate in a steady rate environment because you never know if or when rates will spike.

However, rates could spike or plummet at any point, especially with investors' uncertainty surrounding some of President Trump’s policies. That’s why it’s useful to ask potential mortgage lenders about any float-down options. You’ll pay money to activate your float-down option, but at least it gives you the option to get a lower rate even after locking one in.

The best mortgage lenders offer unique rate lock programs to attract customers. Here’s how some of them work.

Newrez’s Lock & Shop Program. Newrez has a program that locks your interest rate for 45 days while you search for your new home. If rates drop during this period, the lender even lets you relock to get a lower rate at no extra cost. Read the Yahoo Finance Newrez review.

Embrace Home Loans’ two float-down options. Embrace Home Loans allows you to lower your interest rate two times instead of one, up to 15 days before closing. Each float-down option costs 0.25% of your total loan amount. Read our Embrace Home Loans review.

Navy Federal Credit Union’s Special Freedom Lock. Navy Federal Credit Union mortgages offer a float-down option called Special Freedom Lock that lets you float down twice, but the total rate reduction cannot surpass 0.50%. Navy Federal doesn’t charge any fees when you exercise your float-down option unless you extend it past the 60-day rate-lock period. Here is our Navy Federal mortgage review.

Third Federal Savings & Loan. You lock in your rate for 60 days with Third Federal mortgages. The lender even has a 360-day rate lock if you provide 1% of your loan amount up-front as a deposit. Read Yahoo Finance’s Third Federal mortgage review.

Read more: The best mortgage lenders for first-time home buyers

If you’re locked in and mortgage rates fall, you’ll be stuck paying the higher rate unless your rate lock includes a float-down option. A float-down option lets you honor your locked-in rate or the current rate, whichever is lower. This option isn’t free, though. You can expect to pay between 0.5% to 1% of the loan amount when you use a float-down. For a $350,000 loan, that's $1,750 to $3,500.

Locking in your mortgage rate is typically worth it when rates are rising or unsteady, and you want to protect yourself from paying a higher rate at closing. If mortgage rates increase after you’ve locked in the rate, you still get to keep your lower rate.

Lenders typically charge anywhere from 0.25% to 0.5% of your loan amount to lock in a mortgage rate. So, if you take out a $300,000 mortgage loan, you can expect to pay $750 to $1,500 for a mortgage rate lock.

This article was edited by Laura Grace Tarpley.

It's overwhelming to be a first-time home buyer. Buying a house in 2025 takes a series of savvy financial moves, and you'll need a mortgage lender who can be a true partner in the process. Not a knock-it-out, "Who's next in line?" provider, but a lender with deep resources and loan options that can make your homeownership dream come true.

Yahoo Finance has analyzed leading mortgage lenders, considering important aspects of the loan process, such as average mortgage rates and total costs, and used this data to create the ultimate "best of" list for August 2025 — without conflicts of interest or compromise.

The Yahoo view: Truist distinguishes itself with down payment assistance and lender credits, among other first-time home buyer advantages. However, it has a below-average score for customer satisfaction.

Read our full Truist mortgage review

Key benefits

A Community Homeownership Incentive Program offers low or no down payments, lender credits, and no mortgage insurance to eligible borrowers in qualifying areas.

Medical professionals may qualify for lower down payments, waived mortgage insurance, and the exclusion of student loans from debt-to-income requirements with Truist mortgages.

Need to know

Published mortgage rates default to one discount point to show a more favorable interest rate but can be adjusted to zero points.

Scores below the average for customer satisfaction, according to the latest J.D. Power Mortgage Origination Satisfaction Study.

The Yahoo view: NFCU offers several distinctive benefits, including interest rate protection on VA-backed mortgages for active and former military members. Although it has our highest star rating, it is specifically best for military-affiliated first-time home buyers.

Read our full Navy Federal Credit Union mortgage review

Key benefits

The Special Freedom Lock allows an interest rate reduction of up to 0.50% if mortgage rates move lower before your loan closing — just one reason why NFCU is on Yahoo Finance's list of the best VA lenders.

The No-Refi Rate Drop allows you to tap a lower interest rate six months or later after closing — for a $250 fee but without changing your loan terms or taking on additional closing costs as you would with a refinance.

A rate guarantee states that Navy Federal will match a better mortgage rate offered by a competing lender or pay you $1,000.

Military Choice loans allow benefits similar to VA mortgages to current and former service members without further entitlements.

Buy your home through a Navy Federal real estate agent partner and receive $400 or more cash back.

Need to know

Navy Federal Credit Union home loans are available to members only. Eligibility includes active duty or former members of the armed forces, Department of Defense or National Guard and family or household members.

Ranks above the average of all the lenders considered in the latest J.D. Power Mortgage Origination Satisfaction Study.

The Yahoo view: TD Bank excels in home loan selection with the broad selection of products typical of a depository institution. However, its services are only available in just over a dozen states.

Read our full TD Bank mortgage review

Key benefits

TD Bank mortgage punches above its weight. Only a short list of mortgage loans is unavailable.

Offers a comprehensive selection of educational resources for borrowers, including calculators.

Fee discounts are available to existing TD customers.

Need to know

Individualized rates are available by filling out a simple online form.

Serves 15 states (CT, DE, FL, MA, MD, ME, NC, NH, NJ, NY, PA, RI, SC, VA, VT) plus Washington, D.C.

Dig deeper: How to choose a mortgage lender

The Yahoo view: Chase Bank offers a wide assortment of home-buying tools, including nearly a dozen calculators, plus videos, checklists, FAQs, and more.

Read our full Chase mortgage review

Key benefits

Chase has an abundance of online learning resources, which are perfect for guiding a first-time home buyer through a complicated process.

Chase offers a $5,000 guarantee to close a home loan as quickly as in three weeks under specific guidelines.

VA loans may be eligible for a credit of up to $2,000, which you can apply to closing costs.

Chase is having a mortgage rate sale for home buyers, and you could get a discount of up to 0.25% for the life of your loan.

Need to know

Chase has an above-average rating for customer satisfaction, according to the 2024 J.D. Power study.

The conventional loan interest rates on the Chase website are enhanced with strict credit standards, including 20% to 25% down payments, one discount point, and borrowers with "excellent" credit. In other words, the rate you earn could be much different.

The discount for its mortgage rate sale varies by state.

The Yahoo view: Better offers several home-buying services, including rapid loan approval, insurance, real estate attorneys, settlement services, and more, as part of a consolidated digital experience — making it our top online mortgage lender.

Read our full Better Mortgage review

Key benefits

A "One Day Mortgage" offer promises a loan commitment within 24 hours of submitting paperwork and a rate lock.

Better Mortgage claims to close loans "17 days faster than the industry average."

A full-service digital experience includes loans, insurance, real estate attorneys, and settlement services.

Need to know

Published interest rates are shown for borrowers with a 20% down payment, who pay closing costs with cash, have a DTI below 35%, and a credit score of 760 or higher.

Mortgage rates are also lowered with two or more discount points.

The Yahoo view: Best-in-class for customer satisfaction, Bank of America also offers a full suite of loan products.

Read our full Bank of America mortgage review

Key benefits

Bank of America is near the top of customer satisfaction rankings in the latest J.D. Power survey.

Offers grants up to $7,500 in closing costs and down payment assistance up to $10,000 for qualified buyers in many, but not all, states.

Existing customers may qualify for an origination fee or interest rate deduction. You'll likely have to sign up to draft your mortgage payments from an account to qualify.

A home buyer program for medical professionals allows borrowers to make lower down payments and exclude student loans from debt limits. Residents and fellows can also close on a loan 90 days before starting a new position.

Need to know

Bank of America's Real Estate Center features home listings, including existing and new construction properties — as well as bank-owned houses.

The Yahoo view: Pennymac is a major lender for loans insured by the FHA (Federal Housing Administration) and is well-equipped to guide first-time homebuyers through the government loan process.

Read our full Pennymac mortgage review

Key benefits

Pennymac is the second-largest FHA lender by loan volume in the nation — and is rated by Yahoo Finance as the best overall FHA lender.

Offers a rate buydown that lowers your interest rate by 1% for one year.

Show sellers you are a serious and qualified buyer with Pennymac's BuyerReady Certification. You will also receive a $1,000 credit to apply to your closing costs.

Use a real estate agent endorsed by Pennymac and get from $350 to $9,500 cash after closing.

Need to know

Pennymac has a well-below-average rating for customer satisfaction, according to the 2024 J.D. Power Mortgage Origination Satisfaction Study.

The Yahoo view: Citibank is a legacy mortgage loan lender with grants up to $7,500 to apply to closing costs.

Read our full Citibank mortgage review

Key benefits

Citi offers a 3% down payment program with no private mortgage insurance (PMI) requirement to borrowers in specified U.S. cities.

Citi’s Lender Paid Assistance Program can cover up to $7,500 in closing costs to qualified buyers.

Need to know

Advertised mortgage rates include substantial discount points and undisclosed credit score requirements.

A Yahoo Finance analysis of HMDA data revealed that Citi charged well-below-median mortgage interest rates in 2023 with average loan costs.

The Yahoo view: An early-mover in digital mortgages, Rate (previously Guaranteed Rate) offers face-to-face service in many markets but is rated well below J.D. Power’s average in customer satisfaction.

Read our full Rate (Guaranteed Rate) mortgage review

Key benefits

For a personal service option, Rate has hundreds of branch locations across the nation.

A "Same Day Mortgage" promises loan approval — but not loan funding — within 24 hours of locking an interest rate and submitting financial documents.

Offers non-qualified mortgages for self-employed borrowers or those who want to qualify using alternative credit standards.

Need to know

Advertised rates factor in more than one discount point, are based on a 20% down payment, and a FICO score well above the national average.

Rate scores well below average in customer satisfaction, according to the latest J.D. Power Mortgage Origination Satisfaction Study.

Read more: How to get a mortgage when you're self-employed

The Yahoo view: Has made a commitment to offer down payment assistance and closing costs credits to advance homeownership for minorities.

Read our full U.S. Bank mortgage review

Key benefits

Has committed $100 million over five years to offer up to $12,500 in down payment assistance and up to an additional $5,000 in a lender fee credit to advance homeownership for minority families.

Existing U.S. Bank customers may be eligible for a credit against closing costs up to $1,000.

A prequalification process is free, "takes five minutes," and does not impact on your credit.

Need to know

A loan application can be made in a loan officer's office, by phone or online.

U.S. Bank's mortgage rates, as published on its website, look appealing. However, the conventional loan rates shown require a down payment of 25% and a FICO score of 740 or better. That's well above the national average credit score of 715.

Many mortgage lenders offer conventional loans backed by Fannie Mae. With the HomeReady program, you only need a 3% down payment and 620 credit score. You also might qualify with a debt-to-income ratio as high as 50%.

You must finish a home-buyer education course to qualify for this program, which is often useful for first-time buyers.

Conventional loans backed by Freddie Mac also require a 3% down payment and an online home-buyer education course. The main differences from the HomeReady program are that Home Possible loans require a 660 credit score and a 45% DTI ratio for buying a house.

FHA loans can be great for first-time home buyers because you can qualify with a 580 credit score and 3.5% down payment. (You can even get an FHA loan with a score as low as 500, but you'll need 10% down in this case.)

VA loans are for eligible active military personnel, veterans, and their families. They're great mortgages for getting your foot in the door of homeownership because you don't need a down payment. The U.S. Department of Veterans Affairs also doesn't set a minimum credit score, so you can shop for lenders that accept low scores if that's an issue.

You also don't need a down payment for USDA loans. These mortgages are for low-to-moderate-income borrowers buying in rural and suburban areas. As with VA loans, the U.S. Department of Agriculture doesn't set a minimum credit score, so the credit score needed will depend on the lender.

We seriously considered the following mortgage lenders with first-time home buyer loans for our best-of list, but they weren’t quite as strong as our top picks:

American Pacific Mortgage

AmeriHome Mortgage

AmeriSave Mortgage

BMO mortgage

Cardinal Financial mortgage

Carrington Mortgage Services

Citizens Bank mortgage

CMG Financial mortgage

CrossCountry Mortgage

Embrace Home Loans

Fairway Independent Mortgage

Fifth Third Bank mortgage

Flagstar Bank mortgage

Freedom Mortgage

Guild Mortgage

Huntington mortgage

loanDepot

Movement Mortgage

Mr. Cooper mortgage

New American Funding

Newrez mortgage

PenFed Credit Union mortgage

PHH Mortgage

Planet Home Lending

PNC Bank mortgage

Prosperity Home Mortgage

Regions Bank mortgage

Rocket Mortgage

SoFi mortgage

Third Federal Savings & Loan mortgage

USAA mortgage

Veterans United

Wells Fargo mortgage

An FHA loan is often the best type of loan for first-time home buyers because you only need a 580 credit score and a 3.5% down payment (or a 500 credit score with 10% down). It also allows borrowers with more debt to buy a home than many other types of mortgages. These features are great for first-time buyers who may not have much money saved or haven't had time to build up their credit yet. However, a conventional loan could be good if you're a first-time buyer with a strong credit score and lower debt levels, because many lenders only require 3% down.

First-time home buyers should look into three government-backed home loans: FHA, VA, and USDA loans. FHA loans are geared toward people with higher debt levels and lower credit scores. VA loans are for military-affiliated buyers who don't have any money for a down payment. USDA loans are for lower-income homeowners buying in rural areas and also don't have any money for a down payment. But conventional loans are still great mortgage options for first-time buyers with 620 credit scores and 3% down.

The best bank (or mortgage lender) will depend on your situation, but we chose Truist Bank as the best lender for first-time home buyers overall. It offers benefits for first-time buyers such as down payment assistance and lender credits.

You can put down as little as 0% as a first-time buyer getting a VA loan or USDA loan. You can also put down 3.5% for an FHA loan. Depending on the lender and how strong your finances are, you may be able to put down as little as 3% with conventional mortgages.

A 30-year mortgage term is usually best for first-time buyers. All common types of mortgage loans offer a 30-year option, and it has lower monthly payments than, say, a 15-year mortgage.

As a first-time home buyer, a 620 credit score is preferable. You can qualify for a conventional mortgage with most lenders with a 620 score. However, FHA loans are often good deals for first-time buyers who might not have had time to build strong credit yet — FHA loans only require a 580 score.

An FHA mortgage is usually the easiest type of loan to get approved for because it has relatively lenient credit score requirements. But if you're affiliated with the military and are eligible for a VA loan, you'll likely be approved because the VA doesn't set a minimum credit score — the requirement varies by mortgage lender.

Methodology:

Yahoo Finance reviews and scores mortgage lenders with quintile scoring in five primary categories: 1) Interest rates. Using 2023 Home Mortgage Disclosure Act data comprised of 10 million home loan applications, we score mortgage lenders on issued mortgage rates below or above the annual median of reporting lenders. 2) Affordability. A measure of loan product availability and the willingness of a lender to offer government-backed loans, low down payments, down payment assistance, and consideration of nontraditional credit. 3) Loan costs. HMDA data is again analyzed, and lenders are rated based on total loan costs compared to the annual median. 4) Rate transparency. The ability of a website user to obtain a mortgage interest rate estimate. We score lenders based on whether rates are enhanced with discount points or high credit score requirements, disclaimers revealing rate assumptions, sample advertised rates, and whether adjustable or no discount point rate estimates are available. 5) Online features. An analysis of the educational material, calculators, and additional resources available to users.

Review of Nationwide Multistate Licensing System (NMLS) data on regulatory actions can trigger a penalty to the score of any lender with a consumer mortgage-related administrative or enforcement action within the past five years.

Advertisers or sponsorships do not influence ratings.

Editorial disclosure for mortgages:

The information in this article has not been reviewed or approved by any advertiser. The details on financial products, including interest rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the lender's website for the most current information. This site doesn't include all currently available offers.

This article was edited by Laura Grace Tarpley.

Home buyers and potential loan refinancers have been pinning their hopes on a return to mortgage rates in the 3% range. However, with home loan rates remaining close to 7% for nearly three years, perhaps 5% is becoming a more reasonable possibility for 30-year fixed mortgages.

Most housing experts aren't expecting rates to move much lower through the end of this year. However, a major economic setback could trigger much lower mortgage rates.

So, expect rates to be mostly unchanged. But prepare for 5% mortgage rates.

Learn more: How to buy a house in 13 steps

What would trigger lower mortgage rates? Realtor.com chief economist Danielle Hale said it's a matter of time.

"The most likely catalyst is time. As time goes by, as you get closer to that 2% inflation anchor that the Fed is targeting, it would normalize the (Federal Funds rate) and it would normalize longer-term interest rates," Hale told Yahoo Finance. "The federal rate would probably get back into the 2-1/2% range or so, which is probably enough to bring long-term yields back around 4%, and that would probably put mortgage rates in the 5-1/2 to 6% range."

She noted that Federal Reserve rate cuts and lower mortgage rates are not a one-for-one proposition. Hale said that from last September through January, the Fed cut its benchmark rate by a percentage point, and mortgage rates rose by almost the same amount.

The Federal Reserve has delayed rate cuts this year. With no Fed meeting scheduled in August, Wall Street has high expectations for a quarter-point interest rate cut in September.

Learn more: How the Fed rate decision impacts mortgage rates

"You could get [to 5% mortgage rates] faster if you were to have a recession," Hale added. "That could cause the Fed to cut rates, and you could see 5 1/2% — maybe even slightly below 5 1/2%, in a really bad recession."

Even though the latest GDP report indicated that the U.S. is not in a recession, the most recent employment data is fanning the flames of recession fears.

Realtor.com research conducted in the first quarter of 2025 found that roughly three in 10 (29.8%) of potential home buyers surveyed said a recession would make them at least "somewhat more likely" to buy a home.

"It seems that some shoppers are anticipating either lower mortgage rates or lower home prices, or both, in a recession to potentially create some sort of opportunity for them to buy," Hale said.

Of course, a recession could bring many complications into the affordability equation: job and income insecurity among the most likely.

Dive deeper: Do mortgage rates decrease in a recession?

If mortgage rates fall into the 5% range, Hale believes it would bring buyers and sellers back into the market. But would a resurging market introduce more competition for buyers?

Hale said that while home buyers are looking for lower mortgage rates, home sellers are too. Listings may increase as sellers see an opportunity to move into their next house at a reasonable interest rate.

"When rates drop, normally that would increase competitiveness in the market because it creates opportunities for home buyers. But I think, interestingly, this will also create some opportunities for home sellers, so we might not see competitiveness pick up quite as much."

Read more: You locked in a low mortgage rate — now you want to move. What should you do?

The window for lower mortgage rates may open quickly — and perhaps close just as fast. As a borrower and home buyer, you'll want to be prepared.

Have your down payment in the bank. When an opportunity to buy presents itself, you'll have the funds ready to take action. Have enough for closing costs too.

Check your credit score and get your personal finances in shape.

Nail down your home price range and target monthly payment. Knowing how much house you can afford and narrowing down the appropriate neighborhoods can set you up for early success when the time is right.

Explore a prequalification. Talk to a few mortgage lenders and have your home loan options lined up. You can have the lenders in your pocket for when it's time for an official loan preapproval.

It's not a common prediction among industry observers, but one expert believes so. Chris Whalen, an investment banker in New York, told Yahoo Finance in a phone interview that 5% is likely the next move for mortgage rates. "If you really wanted to put me on the spot [and ask me] 'how low do you think mortgage rates will go in the next cycle?' I'd say 5%."

It’s unlikely that mortgage rates will fall to 4% anytime soon. Unusually low mortgage rates only became possible following the 2008 housing crisis and the ensuing recession. Then, the COVID pandemic tamped them down even further. It was a rare set of circumstances that pushed mortgage rates to historic lows. It would likely take equally unusual events to cause such low rates to happen again.

The average 30-year mortgage interest rate dipped into the lower 5% range for about six weeks in the summer of 2003. Then again briefly in March 2004. A longer stretch of mortgage rates near and well below 5% began during the housing crisis and recession of 2008 and lasted 14 years, ending in October 2022.

Probably not, on the Fed's current schedule. It would likely take an economic reversal, spurring further federal funds rate cuts, to get mortgage loan rates close to 5%.

Buy a home when you can afford to. A mortgage rate is not a lifetime commitment. It's likely you'll own more than one house, and even if you buy at a higher rate now, you can always refinance when rates come down.