Barbara Corcoran has blunt words on mortgage rates, 2025 housing market (2025)

When mortgage rates began soaring in 2022, housing demand took a nosedive. Existing home sales plummeted as affording a home became increasingly out of reach for many homebuyers.

Mortgage rates have fluctuated over the past three years but remain between 6% and 7%, almost double the average enjoyed over the past two decades.

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Many economists and housing experts predicted mortgage rates would begin to fall as the Fed started cutting interest rates last fall. However, political and economic uncertainty have kept upward pressure on rates.

Though mortgage rates have dropped modestly in recent weeks, the long-term expectations are unknown as trade wars escalate, geopolitical tensions rise, and financial markets remain volatile.

We met with Shark Tank alum and real estate veteran Barbara Corcoran to discuss the housing market, the future of interest rates, and how homebuyers should navigate a challenging housing market.

Interest rates will remain in flux in 2025

Historically, mortgage rates have generally followed the direction of the federal funds rate. However, mortgage levels have been stubborn, and most economists and housing experts note thathigh mortgage rates have been created by the economic uncertainty drivinginflation expectations, the 10-year treasury yield.

Although 2025 mortgage rate forecasts initially anticipated rates dipping below 6% this year, analysts expect levels to hover between 6.3% and 6.5%.

Many buyers are still waiting on the sidelines in the hopes that mortgage rates will fall further over the next few months, but Corcoran shares why that may be a mistake.

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"It's a guessing game — some people believe that interest rates are going to go up. Some people believe they're going to come down," She said. "But what you should be doing is focusing on the most important thing: finding a house, because it ain't easy."

Some housing experts note thatmortgage rates above 5% are the new normal, so homebuyers may need to adjust expectations and plan accordingly.

Mortgage applications are up, but housing market confidence is tepid

More sellers are starting to list their homes, giving buyers more inventory options and higher negotiating power.

Mortgage application numbers have rebounded, but homebuyer confidence remains far below pre-Covid levels. The Mortgage Bankers Association found that mortgage loan applications rose 20% last week, the highest increase since September.

However, housing market confidence remains sluggish, withconsumer housing sentiment levels dropping to their lowest level since 2023. Still, Corcoran believes buyers who sit on the sidelines waiting out the unknown are wasting time and opportunity.

"You know, there are more applications for mortgages right now because they went down a quarter of a point," she continued. "So that says to me that people are losing hope that they're going to go down much more."

"But will interest rates go down? Who the heck knows? Should you be out there looking for an apartment or a home? Sure you should."