Real Estate News

Mortgage Rates Declined Before Possible Policy Shifts

Mortgage rates have declined as financial markets react to anticipated policy shifts. These rate changes present potential opportunities for homebuyers and homeowners considering refinancing options

flareAI Services

25 Dec 2025 — 6 min read

Quick Listen:

Podcast

In West Michigan's bustling housing market, a young couple in Holland huddles over their laptops, crunching numbers with a mortgage calculator. Halfway across the country, a retiree in Florida's sun-drenched Tampa Bay scrolls through listings, emboldened by a slight dip in borrowing costs. Mortgage rates, long a barrier to homeownership, have eased, creating a flicker of opportunity for buyers and sellers in Michigan and Florida. Yet, this moment arrives amid uncertainty, with potential Federal Reserve policy shifts and new real estate commission rules reshaping the landscape. For those navigating these markets, the interplay of lower rates, evolving regulations, and regional dynamics demands a sharp focus on strategy and timing.

Home buying or selling shouldn't mean paying for services you don't use or need. Now, with new rules, you can choose exactly what you pay for. Side Door's smart match engine connects you with vetted agents offering flexible service levels, so you pay only for what you use. Keep the guidance, skip the extras, and save thousands and still get the keys in hand. Join Side Door for FREE today!

A Subtle Shift in Mortgage Rates

The recent decline in mortgage rates has sparked cautious optimism, particularly in regions like West Michigan and Florida, where local conditions amplify its impact. A Fannie Mae forecast projects the 30-year mortgage rate will settle near 6.5 percent by the end of 2025, dipping slightly to 6.3 percent by 2026. This modest retreat from recent highs reflects the Federal Reserve's decision to trim short-term rates, even as longer-term rates, tied to the 10-year Treasury, have risen due to tempered expectations for future cuts. This divergence, driven by robust economic growth signals, complicates the outlook for a robust home sales recovery in 2025, as affordability challenges and lock-in effects persist.

In Michigan, the Michigan State Housing Development Authority (MSHDA) reports a slight increase in mortgage applications, particularly in Grand Rapids and Holland, where lower rates have lured first-time buyers back to the table. Yet, affordability remains a hurdle in the Grand Rapids metro area, where tight inventory keeps prices elevated. In Florida, Florida Realtors note a rise in pending home sales, fueled by out-of-state buyers and retirees seizing the moment. However, rising insurance costs and climate-related risks temper the enthusiasm, reminding buyers that lower rates don't solve every problem.

Regional Dynamics: Michigan's Restraint, Florida's Drive

West Michigan's housing market is marked by cautious recalibration. In Holland, local banks and credit unions report a surge in inquiries from first-time buyers, drawn by rates that ease monthly payments. A family in Holland, previously sidelined by high borrowing costs, recently secured a mortgage that trimmed their budget by hundreds monthly. Yet, challenges persist. Grand Rapids, despite its economic vibrancy, faces a chronic shortage of homes, and affordability gaps mean lower rates don't fully bridge the divide for many middle-income households.

Florida, by contrast, pulses with momentum. In Tampa and Miami, investors are leveraging the rate dip to acquire multi-family properties, betting on long-term appreciation. Florida Realtors highlight that out-of-state buyers, particularly retirees, are driving demand, drawn by the state's lifestyle and the chance to lock in financing before rates climb. But Florida's market isn't without risks. Soaring insurance premiums, fueled by hurricane exposure, can offset rate-driven savings, leaving buyers to weigh complex trade-offs. A Tampa homebuyer might secure a 6.5 percent mortgage but face insurance costs rivaling their monthly payment.

In both regions, proptech platforms are thriving. Virtual tours, AI-driven valuation tools, and online mortgage calculators are seeing record engagement as consumers navigate a market where every percentage point counts. These tools, once supplementary, are now indispensable, empowering buyers and sellers to make informed decisions in a shifting environment.

The NAR Settlement: Redefining Commissions

Beyond mortgage rates, the real estate industry is grappling with a seismic shift in commission structures following the National Association of Realtor's (NAR) settlement. As detailed in a U.S. News article, the settlement has dismantled traditional commission agreements, opening the door to negotiation but also sowing confusion. Historically, sellers covered buyer's agent commissions, typically 5-6% of the sale price. Now, with no fixed splits, both parties must negotiate fees, reshaping transaction costs.

For buyers, this offers potential savings if they navigate negotiations skillfully. A Clever guide outlines tactics like requesting flat-fee services or lower rates, though outcomes vary by market and agent willingness. Sellers face a more complex reality. In Michigan's tight market, lower commissions could dampen agent enthusiasm for showings, potentially slowing sales. In Florida's competitive landscape, sellers may still pay standard rates to secure top-tier representation. A Yahoo Finance report notes that these changes haven't significantly reduced costs, with many transactions still near traditional commission levels.

Proptech firms are stepping up, offering tools like commission calculators and transparent pricing models to demystify costs. These platforms align with the industry's push for clarity post-NAR settlement, helping consumers compare fees and estimate closing costs. Yet, misconceptions linger. Some buyers wrongly assume agents now work for free, a myth dispelled by Realtor.com, which clarifies that commissions remain negotiable but far from eliminated. This transparency is critical, as misunderstandings could lead to unrealistic expectations in an already complex market.

Navigating Risks and Seizing Opportunities

Despite the optimism, significant challenges remain. In Michigan, affordability remains a stubborn barrier, particularly in Grand Rapids, where median home prices have outstripped wage growth. Even with rates projected at 6.5 percent , per the Fannie Mae forecast, many buyers struggle to qualify. Inventory shortages exacerbate the issue, leaving some to question whether waiting for clearer policy signals is the wiser choice.

Florida's hurdles are equally formidable. Rising insurance premiums, driven by climate risks, can negate the benefits of lower rates. A Miami buyer might celebrate a lower mortgage rate only to face insurance costs that strain their budget. Both regions share a common uncertainty: persistent inflation could prompt the Federal Reserve to slow rate cuts, pushing borrowing costs upward and disrupting today's fragile optimism.

Yet, opportunities are emerging. Buyers in West Michigan can lock in financing now, gaining a foothold before rates potentially rise. In Florida, sellers are capitalizing on renewed buyer interest, particularly in mid-tier markets like Tampa, to list properties. Real estate professionals and proptech firms are seizing the moment, deploying digital tools to streamline transactions. Mortgage comparison apps, commission calculators, and AI-driven valuation models are empowering consumers to navigate a market where affordability and transparency are increasingly linked.

The interplay of these factors lower rates, new commission rules, and regional dynamics creates a unique window. For buyers, it's a chance to act before policy shifts alter the landscape. For sellers, it's an opportunity to attract buyers drawn by better financing terms. For agents, it's a call to adapt, leveraging technology to meet client's evolving needs.

A Market Poised for Change

Michigan and Florida stand at a crossroads. University of Michigan economists warn that mortgage rates may remain volatile until the Federal Reserve's next moves solidify. Florida Atlantic University researchers predict sustained demand from out-of-state buyers, though rising insurance costs could temper enthusiasm. The slight dip in rates offers a rare opportunity a chance for buyers to re-enter, sellers to list, and agents to adapt to a new commission reality.

The story, ultimately, is one of resilience and adaptation. In Holland, a family celebrates their new mortgage, while a Tampa investor closes on a multi-family property, eyeing future gains. Across both states, proptech tools are bridging gaps, offering clarity on commissions, rates, and valuations. As the industry braces for policy shifts, one truth stands out: success in this market demands staying informed and agile. For buyers, sellers, and agents, the path forward lies in embracing transparency and innovation, seizing today's opportunities before the market shifts again.

Frequently Asked Questions

What are mortgage rates expected to be in 2025 and 2026?

According to Fannie Mae forecasts, the 30-year mortgage rate is projected to settle near 6.5 percent by the end of 2025, with a slight dip to 6.3 percent by 2026. This modest decline from recent highs reflects the Federal Reserve's decision to trim short-term rates, though affordability challenges and inventory shortages continue to impact the housing market recovery. The rates remain volatile and dependent on future Federal Reserve policy decisions and economic conditions.

How are the new NAR real estate commission rules affecting buyers and sellers?

The National Association of Realtors settlement has eliminated traditional fixed commission structures, requiring buyers and sellers to negotiate agent fees independently rather than sellers automatically covering both sides. While this creates potential for savings through negotiation, many transactions still occur near traditional commission levels of 5-6%. Buyers should understand that agents don't work for free, and sellers in competitive markets may still pay standard rates to secure top-tier representation and maximize showings.

Are lower mortgage rates making homes more affordable in Michigan and Florida?

While lower mortgage rates have sparked increased buyer interest in both states, affordability challenges persist due to regional factors. In Michigan, particularly Grand Rapids and Holland, tight inventory keeps prices elevated despite lower rates, making it difficult for middle-income households to qualify. In Florida, the benefits of lower rates are often offset by soaring insurance premiums driven by hurricane exposure and climate risks, with some Tampa buyers facing insurance costs that rival their monthly mortgage payments.

Disclaimer: The above helpful resources content contains personal opinions and experiences. The information provided is for general knowledge and does not constitute professional advice.

You may also be interested in: Real Estate Near Me: Local Factors Drive Buyer Decisions