Bank of America Outlines Path to 5% Mortgage Rates
Mortgage rates are continuing to trend downward, with Freddie Mac’s average 30-year fixed rate now at 6.35%—the lowest this year. Analysts point to softer labor market data and renewed investor demand for mortgage-backed securities as key factors behind the drop. But Bank of America believes deeper declines would depend on significant Federal Reserve intervention.
Key Points:
The 30-year fixed mortgage rate recently fell to a 2025 low of 6.35%.
Daily data suggests rates may slide even further in the near term.
Bank of America forecasts year-end 2025 rates at around 6.25%.
A drop to 5% would likely require the Fed to resume MBS quantitative easing.
While rates could ease further, Bank of America cautions that only major Fed action or a weakened economy might push borrowing costs down to 5%. Buyers and investors should stay alert to policy shifts that could reshape affordability.
By: Lance Lambert | ResiClub | September 16, 2025
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