Mortgage rates have been a big topic lately, and it’s no wonder why. One of the most common questions I hear is, “When will mortgage rates come down?” Rates are important, but they’re just one piece of the affordability puzzle. Buyers are also struggling with high home prices and tighter cash flow caused by inflation. These factors together are squeezing affordability, and buyers are eager for solutions. It’s the kind of question that directly impacts how you approach buyers in today’s market.

I usually answer this question by offering two potential paths. Here are two paths forward based on a recent economic forecast from FTN Financial.

Path 1: A Decline in Rates

If inflation eases and economic growth slows, the Fed could resume rate cuts, bringing mortgage rates down. However, recent developments suggest fewer rate cuts are expected in 2025, with the Fed projecting only two cuts instead of four. This reflects ongoing inflationary pressures and could delay significant relief for mortgage affordability. Several forecasts, including data from FTN Financial, suggest inflation might peak in late 2025 before cooling in 2026, with core inflation expected to drop from 3.3% to 2.6%. This could eventually make homes more affordable and open the door for more buyers.

For salespeople, this means preparing for buyers who’ve been holding out for better affordability. Be ready to act quickly and clearly show why now could be the right time to buy.

Path 2: Elevated Rates Persist

On the other hand, if economic growth stays strong or inflation remains stubborn, mortgage rates could stay high for longer. The Fed’s updated inflation expectations, with core PCE inflation forecasted at 2.5% in 2025, signal persistent cost pressures. Despite recent Fed rate cuts, mortgage rates have currently risen to 7.13%, highlighting a disconnect between federal policy and consumer borrowing costs. Rising short-term bond yields also reflect market expectations for a slower path to easing. FTN Financial notes that Q4 2024 GDP growth is tracking at 3.3%, thanks to strong consumer spending. This momentum is keeping upward pressure on rates.

In this case, the Fed is expected to hold rates steady at 3.75%- 4.0% through 2026, and we could see 10-year Treasury yields spike to 4.75% or higher before eventually easing. For salespeople, this means pursuing affordability strategies: helping buyers understand financing options, highlighting the stability and benefits of new homes, and emphasizing long- term value over short-term hesitations.

Key Takeaways for Sales Teams

The key to selling homes today is learning how to have effective conversations about affordability and financing. While everyone hopes rates will come down, current forecasts suggest they may stay elevated for a while. Take the time to master financing options, use the right incentives, and build confidence when addressing buyer concerns. With mortgage rates elevated and inflation pressures remaining, helping buyers navigate financing challenges is more critical than ever. The better equipped you are, the easier it will be to guide buyers to solutions and find success in this market.

The market is evolving quickly, and staying ahead means staying informed. Let’s keep empowering buyers to make confident decisions, no matter where rates land. With the right approach, you can turn today’s challenges into opportunities for growth and success.

Anthony is a Contributing Author and the National Builder Manager for CMG Home Loans. With extensive experience working with builders across the U.S., he provides valuable insights on market analysis and innovative financing strategies to help builders tackle today's market challenges. This blog post summarizes the article "What Might a Fed Rate Cut Do For Mortgage Rates?" by Matthew Graham, originally published on Mortgage News Daily, with additional commentary, market insights, and strategies by Anthony Grasst. Connect with Anthony on LinkedIn or via email at agrasst@cmghomeloans.com for more insights and strategies.