FOX Business correspondent Gerri Willis engages in a crucial conversation with real estate agent Lizette Sinhart about the ongoing challenges in the housing market. In this article, we delve deep into the factors influencing mortgage rates and their impact on homebuyers and sellers.

Unraveling the 2025 Housing Forecast and Its Implications

Section 1: Mortgage Rate Trends and Forecast

Mortgage rates are expected to show a downward trend in 2025, as indicated by Realtor.com's forecast. Currently, the average 30-year fixed rate mortgage stands at 6.81%, which is an improvement from a year ago when it averaged 7.22%. However, the report highlights that mortgage rates remain a wildcard due to policy and economic uncertainties. It predicts that the benchmark rate will average around 6.3% in 2025 and fall slightly to 6.2% by the end of the year. This modest decline is likely to have a significant impact on housing affordability.Even with the expected improvement, many would-be buyers and sellers are still hesitant. According to a Zillow survey earlier this year, about 80% of mortgage holders have a rate below 5%. This shows the challenge faced by those looking to enter or exit the housing market.

Section 2: Impact on Homebuyers and Sellers

As home prices stay high, housing affordability becomes a crucial factor. Danielle Hale, Realtor.com's chief economist, emphasizes that mortgage rates will tip the scales for many buyers and sellers. The modest decline in rates is not expected to lead to a significant reset in the lock-in effect for existing homeowners. However, over time and with life events, the share of outstanding mortgages under 6% is expected to fall from 84% in mid-2024 to 75% by the end of 2025.This has implications for both buyers and sellers. For buyers, lower mortgage rates could make homeownership more accessible, but high home prices still pose a challenge. Sellers, on the other hand, may face a slower market if mortgage rates remain higher, as it could deter potential buyers.

Section 3: Role of Freddie Mac and Fannie Mae

Freddie Mac's latest Primary Mortgage Market Survey shows the average rate on the popular 30-year fixed mortgage. Their data provides valuable insights into the current state of the mortgage market. The support from Freddie Mac and Fannie Mae in backing bigger home loans in 2025 is also an important aspect to consider. This could potentially help more people enter the housing market and stimulate home sales.In conclusion, the 2025 housing forecast presents a complex picture with mortgage rates playing a crucial role. While there is an expected decline, uncertainties remain. Homebuyers and sellers need to carefully navigate these challenges to make informed decisions in the housing market.