Will Mortgage Rates Drop or Increase in July 2025: Key Predictions

Will mortgage rates drop in July 2025? The short answer is probably not by much. Based on what experts are saying right now, it looks like we can expect rates to stay pretty close to where they are currently, hovering in the mid-6% range. So, lower than what we have seen. But, let's dig deeper into what's driving these predictions and what it all means for you if you're thinking of buying a home.

Will Mortgage Rates Drop or Increase in July 2025: Key Predictions

Where Mortgage Rates Stand Right Now

As we roll towards July 2025, the average 30-year fixed mortgage rate is sitting around 6.77%, according to Freddie Mac. We've seen a tiny dip in the past few weeks, which is good news. For the four weeks leading up to that date. Now, that doesn't necessarily mean that will continue.

What the Experts Think: July 2025 Mortgage Rate Forecasts

I have been checking out a few different sources to get a better sense of where things might be heading. Here's a quick rundown:

• Long Forecast: These guys are thinking the average rate in July 2025 will be around 6.71%, bouncing between 6.48% and 6.88%. They predict we'll end the month at 6.68%. The general outlook is a mild decline from where we are right now.
• Mortgage Bankers Association (MBA): The MBA chimes in which similar predications, expecting rates to hover around 6.7% for the third quarter of 2025 (July, August, September). So roughly the same as what Long term forecast is.
• Other Experts: Some major players like Fannie Mae, Wells Fargo, and the National Association of Home Builders (NAHB) are all saying the same thing: rates are likely to stay in the mid-6% range throughout 2025. Fannie Mae thinks we might see 6.1% by the end of 2025, while Wells Fargo predicts that rates will fall to approximately 6.5%.

What do I take away from all of this? Don't expect any huge changes. Most experts think mortgage rates will stay pretty steady, maybe dipping a little bit, but we're not talking about a dramatic drop.

The Federal Reserve's Playbook

The Federal Reserve (often called the Fed) has a massive impact on mortgage rates. The policies the Fed puts in place can have lasting effects on not just mortgage rates, but all interest rates. Their decisions about the federal funds rate (the rate banks charge each other for overnight lending) influence the whole interest rate environment.

In their June 2025 meeting, the Federal Reserve decided to keep the federal funds rate between 4.25% and 4.50%. According to their “dot plot” (which is basically a chart showing what each Fed member thinks will happen with interest rates), most members expect two rate decreases at some point in 2025. But, some think there will be no rate cut, while others imagine three rate cuts. As you can see, there's a lot of disagreement on the board.

Keep an eye on the next FOMC meeting (July 30, 2025). If the Federal Reserve decides to lower rates then, we could see a slight drop in mortgage rates by late July or early August. Since they are concerned about inflation, they are probably going to tread cautiously, which means any rate cuts may not be that big!

Inflation: The Wild Card

Inflation is one of the biggest factors that determine where mortgage rates are headed. High inflation generally leads to higher interest rates. Here's what the data is showing:

• May 2025 CPI Data: The Consumer Price Index (CPI), which measures how much prices have changed, rose 2.4% over the past year in May 2025. This is up from 2.3% in April. This is not good news because President Trump's tariff policies could push inflation even higher.
• Federal Reserve Expectations: The Fed think PCE inflation is looking at 3.0% for 2025, with core PCE inflation at 3.1%. Both are higher than the Fed's 2% inflationary target.

What does this all mean? It tells me that rising tariffs and inflation may prevent the Fed from making large rate cuts. Also, inflation could potentially leave rates stagnant or even increased. On the other hand, if inflation gets under control, we could see rate cuts that could help people buying homes.

Market Uncertainty: What it Means for You

Based on what I have been reading, it's clear not everyone agrees on when and how much the Fed will cut rates. The Fed's “dot plot” proves this, as it indicates that views range from no cuts to potentially three cuts. I am also monitoring slower GDP growth and rising unemployment because they could influence the Fed's decision making as well.

What This Means if You're Thinking of Buying a Home

For people who want to buy a home, these facts suggest the following: rates are probably not going to change much anytime soon.

• Timing: Waiting until after the July 30 Fed meeting could give you a clearer idea of where rates are headed. If there's a rate cut, you might see lower mortgage rates in early August.
• Shop Around Extensively: Shopping around is always a good idea, but as Forbes Advisor reports, rates can vary from lender to lender.
• Keep an Eye on the Economic Indicators: Be sure to keep an eye on important indicators like the June 2025 CPI data, due in July, because this will influence Fed decisions.

Mortgage Rate Predictions Table

This following is a summary of predictions for 30-year fixed mortgages during the month of July this year.

Source	Mortgage Rate Prediction for July 2025 (30-year fixed)
Long Forecast	6.71% average, closing at 6.68%
Mortgage Bankers Association (MBA)	6.7% average in Q3 2025
National Association of Home Builders (NAHB)	Mid-6% range by end of 2025
Fannie Mae	6.1% by end of 2025
Wells Fargo	~6.5% by end of 2025
J.P. Morgan	Above 6.5% in 2025, eases to 6.7% by year-end

Final Thoughts

So, will mortgage rates drop in July 2025? It is not expected for rates to increase, but there's likely going to be only a slight lowering of rates. This is contingent on what the Federal Reserve does on July 30th. Rising tariffs and inflation concerns make it seem less likely that any rate cuts will be substantial. So keep your eye on both Fed announcements and economic changes: This will help ensure that you get the best possible interest rate on a house. Be sure to talk to different lenders about their mortgage options!