At 1st United Mortgage, one of the most common questions we hear from military families and veterans is, “Will mortgage rates go down soon?” After several years of market volatility, rate hikes, and inflationary pressure, it’s no surprise that homebuyers are eager for more stability—and lower borrowing costs.
As we move through 2025, many veterans and service members are trying to decide whether to lock in a mortgage rate now or wait for a potential drop. In this article, we’ll break down what the latest trends suggest about the future of mortgage rates, what that means for VA loan borrowers, and how to move forward with confidence regardless of what the market does.
What’s Been Driving Mortgage Rates Over the Last Few Years?
Since 2022, mortgage rates have climbed significantly from the historically low levels seen during the pandemic. The Federal Reserve began raising its benchmark interest rate in an effort to combat inflation, and that action caused ripple effects across the lending market—including home loans.
By early 2024, the average 30-year mortgage rate climbed above 7% for many borrowers, and even VA loan rates—which are typically lower than conventional rates—began to inch higher. This created a challenging environment for first-time buyers, military families relocating on PCS orders, and veterans hoping to refinance.
As of early 2025, the Fed has paused its rate hikes, and inflation has cooled slightly, but mortgage rates remain volatile. Many experts believe we’re entering a transitional phase—meaning interest rates could begin to ease later this year or in 2026.
Will Mortgage Rates Drop in 2025? Here’s What the Experts Say
While no one can predict interest rates with 100% accuracy, most analysts agree that rates are unlikely to return to pandemic-era lows in the near future. However, there is growing optimism that mortgage rates may gradually declinein the second half of 2025—particularly if inflation continues to ease and the Fed begins cutting its benchmark rate.
That said, any drops are likely to be modest and slow, not sudden or dramatic. Here’s what that means in practical terms:
- If you’re waiting for rates to hit 3% again, you’re likely waiting in vain.
- A shift from the mid-7% range to the mid-6% range could still have a big impact on affordability.
- VA loan borrowers, in particular, are in a good position to secure below-market rates due to the backing of the U.S. Department of Veterans Affairs.
Why VA Loan Borrowers Have a Distinct Advantage
One of the most important things to understand is that VA loan borrowers typically receive lower interest rates than conventional borrowers, even when the market is volatile.
At 1st United Mortgage, we consistently help veterans and active-duty military members secure rates that are 0.25% to 0.5% lower than comparable conventional loans. That means that even in a high-rate environment, VA loans remain one of the most affordable financing options available.
VA loans are also more flexible when it comes to credit requirements, debt-to-income ratios, and loan terms, which can make a big difference when navigating uncertain market conditions.
Should You Wait to Buy a Home Until Rates Drop?
This is the big question—and the answer depends on your goals, financial readiness, and local market conditions. Here’s how we recommend thinking about it:
The Case for Buying Now
- Home prices are still rising in many areas: Even if rates drop slightly later in the year, home prices may continue to climb, which can cancel out the savings.
- VA buyers don’t need to wait for a down payment: Since VA loans require no money down, many veterans and service members are already in a position to act.
- You can refinance later: Thanks to the VA’s Interest Rate Reduction Refinance Loan (IRRRL) program, you can refinance into a lower rate later with minimal paperwork and reduced fees.
- Stable monthly housing cost: Buying now with a fixed-rate VA loan gives you a predictable payment—even if rents or market rates rise further.
The Case for Waiting
- If your credit needs improvement, taking time to raise your score can help you qualify for the best possible VA rate.
- If you’re uncertain about relocation, delaying a purchase may help avoid complications if your PCS orders change.
- If you’re buying in an overheated market, waiting may provide more inventory or better prices.
Whether you buy now or later, 1st United Mortgage will be here to guide you through every step and make sure you’re getting the best deal possible with your VA loan benefits.
What to Do If Rates Drop After You Buy
If you purchase a home this year and rates drop significantly afterward, you’re not stuck. The VA IRRRL, also known as the VA streamline refinance, allows eligible borrowers to refinance to a lower rate without the typical burdens of a full refinance.
Some key benefits of the IRRRL:
- No appraisal typically required
- No income verification in many cases
- Reduced closing costs
- Fast processing
- Can roll costs into the new loan
At 1st United Mortgage, we help eligible homeowners refinance through the IRRRL program quickly and painlessly—so you can take advantage of lower rates when they arrive.
Preparing for the Market in 2025 and Beyond
If you’re considering a home purchase or refinance this year, here’s how to position yourself for success:
Get Preapproved Early
Whether you plan to buy now or wait, a VA loan preapproval gives you a clear picture of your buying power and allows you to act quickly when the time is right.
Improve Your Credit and Budget
Even though VA loans are flexible, a stronger credit profile and a healthy savings cushion can help you secure better terms and reduce stress during the loan process.
Stay Informed and Work With a VA Loan Specialist
Market conditions can change fast. At 1st United Mortgage, our team watches interest rate trends daily and helps clients time their purchase or refinance with confidence. We’ll never push you to make a move before you’re ready—and we’ll help you understand all of your options, every step of the way.
Speak to a VA Loan Expert Today
While mortgage rates may decline slightly in 2025, they’re unlikely to return to historic lows. But the good news is, VA loan borrowers are still in one of the best positions to succeed in this market—whether you buy now or refinance later.
If you’re ready to explore your VA loan options or want help building a smart mortgage strategy for the year ahead, contact 1st United Mortgage today. Our experienced VA loan specialists are here to guide you through preapproval, rate locks, purchase loans, and refinancing with total clarity and confidence.
📞 Call us at (931) 548-1985 or
💻 Visit us at 1unitedmortgage.com
Let’s make your VA benefits work for you—no matter what the rate market looks like.