Orange County Mortgage Rates: What to Watch For in 2025

The U.S. Economy and Mortgage Rates: What to Watch in 2025

Thank you for stopping by my blog, my name is Briana Harper and I am a Real Estate Agent here in the iconic Orange County. This week I have been reading a ton about the economy while I enjoy my coffee each morning. Here is my take: As we navigate the 2025 real estate market, keeping an eye on the U.S. economy is crucial for understanding where home borrowing costs may be headed. One of the best indicators of economic growth is the Gross Domestic Product (GDP), measured by the Bureau of Economic Analysis (BEA). GDP reflects the total value of goods and services produced in the U.S. and serves as a key gauge of the nation's overall economic health.

How GDP Affects Mortgage Rates

When the economy is thriving, businesses and consumers are more likely to borrow money for investments and purchases. This increased demand for loans can drive interest rates higher as lenders adjust to the market. Additionally, a strong economy often comes with low unemployment and rising wages, which can contribute to inflationary pressures—another factor that can push mortgage rates upward.

Conversely, in a slowing economy, borrowing demand decreases, leading to lower interest rates. A cooling job market and reduced consumer spending can signal economic weakness, prompting lenders to adjust rates downward to stimulate borrowing.

2025 GDP Outlook and Mortgage Rate Expectations

A GDP growth rate between 2-3% annually is typically considered stable. According to Fannie Mae, the projected GDP growth for 2025 is 2.2%, following an estimated final 2.5% growth in 2024 and a forecasted 2% in 2026. With a 2.2% GDP, mortgage rates may remain relatively steady, assuming inflation stays under control and the Federal Reserve does not implement major policy shifts.

Given these conditions, many analysts expect the 30-year fixed mortgage rate to average around 6.5% this year. While not historically low, this rate is manageable for buyers who are well-positioned financially and looking for long-term stability in homeownership.

Many analysts expect the Orange County 30-year fixed mortgage rate to average around 6.5% this year

The Bottom Line

A steady economy supports a healthy job market, and jobs buy homes. As long as economic growth remains at a moderate pace, the real estate market should continue to see steady activity. For those interested in Orange County real estate and Newport Beach real estate, staying informed on GDP trends and mortgage rate forecasts is essential for making strategic home buying or selling decisions.

For personalized insights on how the market conditions impact your home buying or selling plans, feel free to reach out. At Hammond Moreno Associates, we are here to guide you every step of the way in Orange County real estate!

Briana Harper

HAMMOND MORENO ASSOCIATES

Surterre Properties