The biggest unknown for mortgage rates next year is whether President-elect Donald Trump’s major policy initiatives will ultimately drive up inflation and the national debt, which could keep mortgage rates high. That’s because what happens with inflation, the U.S. deficit and the economy can influence changes in the 10-year U.S. Treasury yield, which lenders use as a guide to pricing home loans.

Trump says he wants to impose tariffs on foreign goods, cut tax rates and ease regulations, policies that could revive the economy but also fuel inflation and increase the U.S. government’s debt.

Redfin economists predict the average rate on a 30-year mortgage will hover around 6.8% next year, citing expectations that Trump’s proposed tax cuts would increase the U.S. deficit and that his plan tariffs could fuel inflation, ultimately pushing mortgage rates higher.

However, mortgage rates could fall as much as 6% if the economy weakens or plans for tariff and tax cuts are canceled, according to forecasts.

Some forecasts are more optimistic that the average rate on a 30-year mortgage will fall in 2025. Fitch Ratings projects it to be between 5.8% and 6.4%, while TD Economics predicts the average rate will fall to 5.8% by 2025. end of the year.

The average rate is still lower than its historical average of 7% dating back to 1971. But that’s little consolation for home buyers, because over the past decade, house prices have risen much faster than income.

“So it’s kind of a double whammy of affordability that someone with a 6% interest rate didn’t have to deal with 30 years ago,” said Lisa Sturtevant, an economist in chef at Bright MLS.

Rates in the 6% range would mean that most homeowners with a mortgage would have to accept a higher rate than they currently have if they chose to sell their home and finance another. More than four in five homeowners with a mortgage have an existing rate below 6 percent, according to Realtor.com.

Economists see bright spots for homebuyers next year. Those who can afford to buy regardless of where the rates are, or who can bypass them altogether by exploiting home equity gains, stand to benefit from a continued increase in the number of homes to be purchased. sell and a modest pace of growth in house prices.

–Alex Veiga, Associated Press