Your 2025 Interest Rate Update and Billings Real Estate Prediction

If you’ve been tuned into the real estate world for any amount of time the last few years, then you know that interest rates have been the main character. All the chatter in the industry for SO long has been about what interest rates are doing.

“Interest rates are so high right now.”

“When are rates going to drop?”

“The FED is meeting again so we’ll know more about interest rates soon.”

It’s been a non-stop conversation and as a Realtor, I totally understand why. The interest rate of course impacts your home buying decisions and it can really affect your mortgage payment. So, obviously it’s something to pay attention to!

But as the months went on and nothing really changed, I started to notice a shift in client conversations. Yes, the interest rate topic would come up, but overtime it became less and less of a deciding factor about whether or not someone was ready to buy. 

And honestly as a Realtor, this made me pretty happy because when it comes to real estate in general, interest rates are always going to be one of those things you can’t control.

They are what they are and there’s really nothing you can do about it – what we CAN do is work together to figure out a way to help you positively navigate the reality of the interest rates for your specific situation!

If you’re reading this in real time, we’re nearing the beginning of Q2 of 2025 and spring is always naturally a pretty busy time in real estate.

So with that, I thought now would be the perfect time to provide an overall state of the market update based on what I’m personally seeing happen in the industry, as well as what’s happening when working with clients. 

2025 Interest Rate Update For Buyers and Sellers

As mentioned above, we had been hearing for months that rates were going to come down. There were talks of a crash and a recession and anytime there’s language like that thrown around, people are going to react. 

In this instance, I saw more buyers waiting rather than moving forward with home purchases, but as 2024 started to come to an end and nothing really changed, I noticed that more buyers started realizing that there was still a way for them to win in the market regardless of what interest rates were doing. 

In 2025, we were hopefully expectant to see some changes in Q1, but surprise, surprise… that still hasn’t happened!

So what exactly does this mean? ⬇️

For Buyers: interest rates are no longer the main topic of discussion 

When consulting with buyers in Billings, MT, we’re more focused on pricing as a whole and I’m specifically interested in helping them fully understand what resources or options are available for them so that they feel like they’re getting a fair deal even WITH a higher interest rate.

A few of those resources and options include:

• Seller Paid Rate Buydown – this technique essentially allows borrowers (aka buyers) to make a lower mortgage payment for the first 2 years of their loan

So, let’s say the interest rate for the home you want to purchase is currently averaging around 7%. If you opt for the Seller-Paid Rate Buydown, that rate will be reduced by 2% making your rate  5% for the first year. The following year, you’ll see a 1% decrease from the original rate, making it 6%. And finally, in that third year, your rate will rise back to the original amount.

For a deeper dive into rate buydowns, CLICK HERE!

• Mortgage Recasting – mortgage recasting is a process that allows homeowners to modify the terms of their mortgage loan without refinancing.

With a mortgage recast, you essentially make a large lump sum payment towards the principal balance of your mortgage, which leaves you with a lower monthly payment and a shorter loan term.

For a deeper dive into mortgage recasting, CLICK HERE!

• Various Loan Types – there are generally 5 common loan types and not all of them are created equal. The loan type you choose should be done based on your specific scenario!

For all of your loan options explained, CLICK HERE!

For Sellers: seller paid closing costs are rising

If you’re selling your home in this market, something to be aware of is that more and more buyers are asking for sellers to pay the entirety or at least a portion of closing costs. This helps offset their borrowing costs so that they still feel comfortable buying in this market. 

It’s important to know that while this might seem like an added expense for you as the seller, it can actually be a smart way to make your home more attractive in a competitive market. 

Offering to cover a portion of closing costs can:

✔️ Make your listing stand out to buyers who are stretching their budgets

✔️ Speed up negotiations by addressing a common buyer concern upfront
✔️ Help you secure stronger offers from buyers who might otherwise hesitate

Overall, in some cases covering closing costs can be the key to closing the deal while still getting a strong price for your home!

2025 Real Estate Prediction for Billings, MT

Now that you know a general overview of what’s happening in the real estate market as a whole, let’s talk about what I believe will start happening in Billings, MT specifically.

As a real estate agent in Billings, MT, I’m already seeing a few trends and I’m pretty confident that they will continue throughout 2025. 

First and foremost, I predict there will be a spike in inventory. For quite a while , more properties were being absorbed than were coming on the market and I’m slowly seeing that change. 

In fact, February was actually the first month we saw more homes go under contract than came on market in a really long time.

Here’s what this ultimately means:

• Market Balance – with the potential increase in housing inventory, the market may experience a shift towards a more balanced state, reducing the intensity of bidding wars and offering buyers more negotiating leverage.

• Price Stabilization – home prices have been on the higher side recently, but we may see the prices come down just a tad in the coming months. However, with sustained buyer demand, significant price drops are unlikely.

• Time on Market – homes may continue to spend more time on the market due to increased inventory, allowing buyers to make more deliberate purchasing decisions.

Overall, this is GOOD NEWS for both buyers and sellers. 🎉

For Buyers, it could mean:

• More Negotiation Power – as the market stabilizes, buyers may have more leverage in negotiations, including asking for seller-paid closing costs (which we’ve been seeing already!) price reductions, or other concessions.

• Less Market Frenzy – if competition cools slightly, buyers may face fewer bidding wars, making it easier to secure a home without overpaying.

• Increased Inventory Options – as spring and summer bring more listings, buyers will have a wider selection of homes to choose from, reducing pressure to rush into a decision.

• Predictable Interest Rates – with rates holding steady, buyers can make informed financial plans without fear of sudden rate hikes.

For Sellers, it could mean:

• Sustained Demand – Billings remains an attractive place to live, and with steady demand, well-priced homes will continue to sell.

• Strategic Pricing Wins – a more balanced market allows sellers to price their homes strategically rather than relying solely on bidding wars, leading to stronger, more stable offers.

• Serious Buyers in the Market – since many buyers have adjusted to the current interest rates, those actively shopping are motivated and READY to make a deal.

• Spring and Summer Activity – as the warmer months bring an increase in listings and buyer interest, sellers can take advantage of peak home-shopping season to get strong offers.

Overall, the real estate market in Billings, MT right now is in a really good spot – and no, I’m not just saying that because I’m a Realtor!

From working with clients, I can tell that the mindset of both buyers and sellers is different in a positive way and we’re finding more and more happy results for all involved.

Ready To Start The Home Buying or Selling Process in Billings, MT?

So, if you’ve been waiting to make a real estate move because you weren't sure what the market was up to, consider this your update and prediction for 2025!

While it’s true that real estate can change at any given minute, this is what the data is showing and it’s what I am truly seeing as I work with my real estate clients throughout Billings. 

If you’re ready to buy or sell your home this year, I’m here to help!

If you’re local to Billings or are planning to make a move here soon, CLICK HERE to connect and I’ll help you get started on the right foot!

And if you aren’t local to Billings, good news for you – I know people! Connect here and I’ll get you in touch with a trusted agent in your area to start the home buying process with ease!