Understanding Today’s Mortgage Rates: Is 3% Coming Back?

A lot of buyers are pressing pause on their plans these days, holding out hope that mortgage rates will come down – maybe even back to the historic-low 3% from a few years ago. But here’s the thing: those rates were never meant to last. They were a short-term response to a very specific moment in time. And as the market finds its footing again, it’s time to reset expectations.

Back in 2020 and 2021, 3% mortgage rates gave buyers a serious boost: more affordability, more buying power, and more opportunity. But those rates were a result of emergency economic policies during the height of a global pandemic. Now that the economy is in a different place, we’re seeing mortgage rates in the high 6% to low 7% range.

And while experts currently project a slight easing in the months ahead, most industry leaders agree: rates are not going back to 3%.

Instead, many forecasts suggest mortgage rates will settle in the mid-6% range by the end of the year, pending any major economic shifts. As Kara Ng, Senior Economist at Zillow, says:

“While Zillow expects mortgage rates to end the year near mid-6%, barring any unforeseen shocks, that path might be bumpy.”

What Buyers Should Know

Basically, waiting for 3% rates might mean waiting longer than you’d expect – and missing out along the way. Instead of putting off homebuying indefinitely, make a plan to get there and focus on what you can control: your budget, your credit, and working with a trusted professional who can explain exactly what’s happening in the current market – and how to navigate it.

Your local real estate agent and a trusted lender make all the difference in this process. The experts have insights into down payment assistance programs, alternative financing options, negotiation strategies, and overall – the experience you need on your side to understand creative ways that will make your plans work.

And here’s the biggest thing to keep in mind. Since rates are projected to ease slightly later this year, if that happens, it could bring some more buyers back into the market. Acting now gives you a head start, especially with more homes on the market than we’ve seen in years.

Think about it: if mortgage rates do come down, what do you think everyone else is going to do? That’s right – they’ll jump back in too.

Getting ahead of that rush could put you in a stronger position to find the right home with less competition. Realtor.com sums it up well:

“Staying out of the market in hopes of a rate drop that never comes can lead to missed opportunities . . . Rising home prices, rent increases, and inflation might outpace any future savings on interest. And if rates do fall sharply again, buyers could face an entirely different challenge: surging competition.”

In recent years, mortgage rates have become one of the hottest topics for homebuyers, homeowners, and real estate professionals alike. With interest rates climbing after the record lows of 2020 and 2021, many are asking: Will we ever see 3% mortgage rates again? Let’s break it down.

A Look Back: The 3% Era

In the early stages of the COVID-19 pandemic, the Federal Reserve slashed interest rates to stimulate the economy. As a result, mortgage rates dipped below 3%—an unprecedented move that led to a surge in refinancing and home purchases. At that time, borrowers locked in historically low rates that won’t likely be repeated anytime soon.

Where Are Rates Now?

As of mid-2025, mortgage rates are generally hovering between 6% and 7%, depending on loan type, credit score, and down payment. These figures reflect a more stabilized post-pandemic economy, ongoing inflation concerns, and the Federal Reserve’s monetary policy to keep inflation in check.

What Influences Mortgage Rates?

To understand whether 3% could come back, it’s important to know what drives rates:

• Federal Reserve Policy: While the Fed doesn’t set mortgage rates, it does influence them through its interest rate decisions and bond-buying activities.

• Inflation: Higher inflation typically leads to higher mortgage rates, while lower inflation can allow rates to drop.

• Economic Growth: A booming economy may lead to higher rates to prevent overheating, whereas slower growth can encourage lower borrowing costs.

• Global Events: Uncertainty caused by geopolitical tensions or market disruptions can push rates down as investors seek safer assets.

Will 3% Mortgage Rates Return?

Short answer: It’s unlikely in the near future.

Most economists agree that the sub-3% rates were an emergency response to a once-in-a-generation event. For 3% rates to return, we’d likely need to see:

• A significant economic downturn

• A sharp decline in inflation

• Aggressive intervention from the Federal Reserve

None of these are ideal scenarios for a healthy housing market or economy. In fact, consistently low rates could contribute to further home price inflation and affordability issues.

What This Means for Buyers and Homeowners

Rather than waiting for 3% to come back, it may be wiser to focus on what you can control:

• Your credit score: A higher score can help you secure a better rate.

• Your down payment: The more you put down, the less risky you are to lenders.

• Loan type and term: A 15-year loan, for example, usually offers lower rates than a 30-year mortgage.

And remember—you can always refinance if rates drop significantly in the future.

Final Thoughts

Chasing the perfect rate can be a costly game. While 3% mortgage rates were incredible, they were also part of a unique economic period we may not see again soon. Instead of waiting on the sidelines, consider the long-term value of homeownership, your personal financial readiness, and how today’s rates fit into your bigger picture.

Book your appointment and let’s talk to take the next step in your real estate journey. Schedule a real estate consultation with one of our team members.