US interest rates are likely to remain elevated in 2025, with a target federal funds rate projected at 3.9% by late 2025. Interest rates are likely to remain elevated in 2025, with a target federal funds rate projected at 3.9% by late 2025.
Ultimately, the best time to buy a car is when you need one. But if you can wait, you may be able to benefit from lower prices and interest rates in 2025. Just don't expect huge savings.
Projected Interest Rates in the Next Five Years
ING's interest rate predictions indicate that in 2024, rates will start at 4%, with subsequent cuts to 3.75% in the second quarter, 3.5% in the third, and 3.25% in the final quarter. In 2025, ING predicts a further decline to 3%.
Economists suggest that the Fed may continue to reduce interest rates by up to 2% in total through late 2024 and 2025. These potential future cuts could bring about even better refinancing terms for borrowers with strong credit.
While used car rates might remain slightly higher, averaging around 10%, the overall trend is positive. This decline in interest rates is expected to continue, with average rates for new and used cars potentially falling to 7% and 10%, respectively, by late 2025.
The National Association of Realtors: NAR's quarterly outlook has 30-year mortgage rates ending 2024 at 6.1% and bottoming out around 5.8% toward the end of 2025. After that, we could see rates tick back up to 6.1% in 2026.
Expert Projections of Interest Rates in the Next Few Years
According to the St. Louis Fed, interest rates in the coming years are expected to be: 2025: 3.4% 2026: 2.9%
Current Forecasts and Expert Opinions
The short answer is: It's highly unlikely we'll see mortgage rates drop back to 3% anytime soon. However, recent inflation numbers point to cooling of the pace of inflation.
Average personal loan rates started at 11.93% in 2024. Rates were relatively unchanged for most of 2024, ending the year at 12.29%. Personal loan rates may be headed lower in 2025, but you'll need good credit to snag the best rates.
December: December is arguably the best month to buy a car. Dealerships are trying to hit their year-end sales quotas, and salespeople are often more motivated to offer better deals to meet these targets. The closer you get to the end of the month, the better the deals tend to be.
Driverless Vehicles Will Be the Future of Connected Cars
2025 will also see the automotive industry moving from Level 2 autonomy to Levels 2.5 and 3, representing a significant evolution in automotive technology and enhancing vehicle automation and safety.
Looking ahead to 2025, we expect to see more of these financing and cash offers and even stronger lease deals, as automakers work to maintain sales momentum. MSRPs are unlikely to fall, but the average new car selling price will drop due to big incentives. This is highly likely for the new cars with the most inventory.
UK interest rates will fall “four times” or more in 2025 -- to at least 3.75% by the end of the year. A majority of economists made this two-fold forecast before UK long-term borrowing yesterday crept up to its highest level since 1998.
Fannie Mae expects rates to average 6.4% for the year. Wells Fargo projects a slight decline, with rates averaging around 6.3% by the end of the year. Goldman Sachs predicts rates will remain above 6% through 2025.
We forecast existing home sales to total 4.25 million in 2025, an improvement of 4.8 percent compared to our expected 2024 sales pace of 4.06 million, but still down 20.3 percent compared to 2019.
So in 2025, expect modest declines in rates for mortgages, auto loans and credit cards, according to Bankrate's chief financial analyst Greg McBride. “Even with those declines, we're not going back to a low-rate environment,” McBride said. “We're going from a high-rate environment to not as high.
Will Mortgage Interest Rates Go Down in 2025? A return to the historically low home interest rates seen from 2015 to 2021 is pretty unlikely within the next 5-10 years, but that doesn't mean we're anticipating them to skyrocket either.
Falling interest rates expected to drive recovery in the second half of 2025, says CIBC's chief economist.
According to economic projections released after the meeting, officials expect to cut rates just twice in 2025 — down from four times in their earlier projections — and the minutes show that even those cuts are not guaranteed.
Oxford Economics is predicitng that base rate will eventually fall to 2.5 per cent in 2027 where it will broadly remain throughout 2028 and 2029.
Mortgage points, also called discount points, lower your interest rate for the life of the mortgage. A lender may allow borrowers to purchase as little as a fraction of a point or up to four points. One mortgage point typically costs 1% of your loan and permanently lowers your interest rate by about 0.25%.
The lowest auto loan rate in 2024 was 7.41 percent for a four-year used car loan in late October. Bankrate's expert predicts that by the end of 2025, five-year new car loan rates will reach an average of 7.0 percent and four-year used car loans, 7.75 percent.
Some economists are projecting three rate cuts this year, including Goldman Sachs, whose economists expect rates to end 2025 in the range of 3.5% to 3.75%, down from its current range of 4.25% to 4.5%.
"According to the Fed's Summary of Economic Projections, they expect to cut rates more over the next few years, reaching a 2.9% Fed Funds rate by 2026," says Josh Lewis, a certified mortgage consultant at The Educated Homebuyer.