Potential for mortgage rates to rise to 8% due to factors like U.S. debt and deficits

From Yahoo Finance: 2025-06-26 09:00:00

Prospective home buyers are wondering “When will mortgage rates go down?” Rates can stay the same, move lower, or rise even higher. Mortgage rates are tied to the bond market, which could be affected by factors like a trade war, rising U.S. debt, and international tensions. Bond market sell-off could lead to 8% mortgage rates.

Investment banker Chris Whalen predicted 8% mortgage rates by 2025 but now believes a Fed rate cut may not lower rates due to U.S. debt and deficits. Rising rates impact affordability, with just a quarter-point increase removing 850,000 households from the market. Mortgage rates touched 8% less than two years ago and could stay high longer.

Clients still ask when rates will fall back to 3%, but more are focusing on affordability now. Mortgage loan originator Dan Frio advises buyers to consider the bigger financial picture and act when the market presents an opportunity, rather than waiting for the perfect rate. Focus on affordability, monthly payments, and long-term wealth-building through equity. Interest rates and house prices are crucial factors in real estate. Fixed-rate mortgages offer stability, while adjustable-rate mortgages can lead to higher payments. Refinancing options exist, but homebuying decisions also hinge on affordability, down payments, debt, and future plans. Historical data shows mortgage rates have varied significantly over time.



Read more at Yahoo Finance: What happens if mortgage rates go up to 8%?