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With 2025 underway and with the presidential inauguration on the horizon, speculation is rife about the direction of interest rates.
Here are some of the main outlooks for where they might be headed:
Mortgage rates
Last week, the Freddie Mac rate for a 30-year fixed mortgage rose to 6.91%, its highest level since July.
But Realtor.com® economists predict that mortgage rates will take a tumble in 2025.
According to our 2025 Housing Forecast, we will see an average mortgage rate of 6.3% in 2025.
Home equity loans and HELOCs
Home equity loan and HELOC rates are also expected to fall.
Bankrate predicts that in 2025, the average home equity loan rate will go from 8.41% to 7.9%, and the average HELOC rate will drop from 8.36% to 7.25%.
Tapping into home equity can be tempting, especially when the average homeowner with a mortgage now has $319,000 of equity in their home, according to Intercontinental Exchange.
Since most HELOCs come with variable rates—which means the monthly payment can fluctuate over the loan’s term—many financial experts believe that home equity loans are the safer option.
“Home equity loans provide homeowners with a set amount of money and an interest rate that is fixed for the entire term of the loan,” says Kyle Enright, president of lending at Achieve in San Mateo, CA. “That means the payments will not change for the life of the loan.”
Both home equity loans and HELOCs offer interest rates significantly lower than credit cards, which currently exceed 23%, and personal loans, which are 12.29%.
However, home equity loans and HELOCs both come with additional risks.
“The downsides to home equity loans and HELOCs are that they use your home as collateral,” says Enright. “If for any reason you miss payments, you could face the risk of foreclosure and losing your home.”
Savings accounts
Interest rates for savings accounts are also predicted to fall in 2025, according to Bankrate.
They project that the highest-yielding one-year CD will decrease from 4.52% to 3.7%; the highest-yielding five-year CD will drop from 4.25% to 3.95%; and the highest-yielding money market accounts and savings accounts will fall from 4.75% to 3.8%.
But even though rates are projected to decrease, they will likely remain higher than inflation at the leading banks in the U.S.