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As of this writing, the average 30-year mortgage rate is 6.12%. Given that the average 30-year mortgage rate was well above 7% around this time last year, 6.12% is an improvement. But it’s also a far cry from the sub-3% mortgage rates borrowers enjoyed back in 2020 and 2021.

If you’re looking to buy a home, you may be wondering if mortgage rates will ever drop below 3% again. The answer is that it’s possible, but unlikely. But that doesn’t mean mortgage rates won’t fall considerably from where they are right now.

A drop in mortgage rates is expected

Borrowing rates have been elevated in general this year thanks to a series of federal funds rate hikes made by the Federal Reserve. But now that inflation is slowing down, the Fed is looking to reverse those rate hikes.

The Fed made its first cut to its benchmark interest rate in mid-September, but it’s by no means done. In the coming year, we should expect a number of follow-up rate cuts, which should result in lower borrowing rates across the board. And that extends to mortgage rates.

So while you may be looking at paying a little more than 6% on a 30-year loan right now, by early 2025, you may be looking at an interest rate below 6%. And rates could even drop below the 5% mark at some point next year.

However, don’t expect mortgage rates to reach 3% — or fall below that mark — anytime soon. The reason rates were so low in 2020 and 2021 is that the U.S. economy was plunged into a deep economic crisis as the COVID-19 pandemic took hold. To avoid having home prices plummet and prevent a mortgage industry collapse, lenders lowered rates to drum up business.

It’s possible that mortgage rates could reach similarly low levels in the future if another major economic catastrophe occurs. But that’s not something we should wish for.

How to score the best mortgage rate possible

Your mortgage rate is influenced by several factors, and general market conditions definitely play a role. You could have outstanding credit right now, for example, and still get stuck paying around 6% for a mortgage simply because that’s what lenders are offering.

However, the higher your credit score, the lower your mortgage rate is likely to be. So if your credit score needs work, you can boost it by paying bills on time, reducing your credit card debt, and checking your credit report for errors.

Shopping around is another important step to take if you want the best mortgage rate out there. Contact a bunch of lenders and compare their offers; you never know when one lender might give you a much better deal than another. Check out this list of the best mortgage lenders to find a fantastic rate on your home loan.

Mortgage rates below 3% are not the norm. And they’re not likely to happen again anytime soon. But that doesn’t mean rates won’t fall into the 4% range, or even the 3% range eventually. There may, for example, come a time when a 3.5% mortgage is attainable.

But if you’re looking to buy a home in the next year or so, that’s not something to bank on. Instead, raise your credit score and do your research so you can get the most competitive rate on a mortgage based on what’s available.

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