Mortgage rates have shown little directional momentum in recent months, and the outlook suggests more of the same. The latest industry research forecasts point to the 30-year fixed mortgage rate staying in the high-6% range through year-end 2025, with only modest room for improvement.

Fannie Mae’s most recent Economic & Strategic Research report projects rates near 6.8% in Q3 and Q4, while the Mortgage Bankers Association (MBA) sees them drifting toward 6.5% by year-end. Freddie Mac’s survey currently places the national average around 6.6%, reinforcing the view that mortgage rates will remain range-bound for the rest of the year. Data from ICE Mortgage Monitor suggests that under more favorable conditions, if the 10-year Treasury yield declines and mortgage-backed securities (MBS) spreads tighten, rates could slip closer to 6.3% by early 2026, but such a move appears unlikely in the next six months as the long-end of the curve remains anchored due to inflation expectations.

Several structural factors are keeping mortgage rates elevated relative to Treasuries. These include a wide mortgage-to-treasury spread, reduced Federal Reserve demand for MBS as it continues balance sheet runoff and steady T-Bill issuance that sustains upward pressure on yields. Also to note, mortgage rates do not fall in lockstep with Fed rate cuts, as long-term bond yields and funding spreads are more influential.

What this means for credit unions

For credit unions, the implication is that mortgage demand may remain constrained by affordability, with refinancing activity unlikely to rebound in a meaningful way (e.g. activity that would mirror 2020-2021 refinancings) until rates fall more decisively into the mid-6s or lower. Purchase activity should remain steady but selective, driven largely by borrowers with pressing housing needs rather than opportunistic buyers. On the balance sheet side, credit unions may continue to see slower mortgage growth, while spreads and member affordability remain central challenges.

Overall, the near-term outlook is for stable but “range-bound” mortgage rates, leaving credit unions focused on member education, affordability solutions and prudent balance sheet management until more favorable lending conditions emerge.

At Catalyst, we understand the unique challenges credit unions face in navigating today’s rate environment. Our team delivers the tools, insights and balance sheet strategies that help you stay competitive, support member affordability and position your credit union for long-term success, no matter where mortgage rates trend next. Let’s start the conversation today about how Catalyst can strengthen your lending strategy and help you serve members with confidence.