Average Rate on 30-Year Mortgage Drops to Lowest Level Since October

The average rate on a 30-year U.S. mortgage fell this week to its lowest level in nearly 10 months, giving prospective homebuyers a sorely needed boost in purchasing power that could help inject life into a stagnant housing market.

Current Mortgage Rates

The long-term rate fell to 6.58% from 6.63% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.49%. Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also fell. The average rate dropped to 5.71% from 5.75% last week. A year ago, it was 5.66%, Freddie Mac said.

Impact of Elevated Mortgage Rates

Elevated mortgage rates have helped keep the U.S. housing market in a sales slump since early 2022, when rates started to climb from the rock-bottom lows they reached during the pandemic. Home sales sank last year to their lowest level in nearly 30 years.

Recent Trends in Mortgage Rates

This is the fourth week in a row that rates have come down. The latest average rate on a 30-year mortgage is now at its lowest level since Oct. 24, when it averaged 6.54%. Mortgage rates are influenced by several factors, from the Federal Reserve’s interest rate policy decisions to bond market investors’ expectations for the economy and inflation.

Factors Influencing Mortgage Rates

The main barometer is the 10-year Treasury yield, which lenders use as a guide to pricing home loans. The yield was at 4.29% at midday Thursday, up slightly from 4.24% late Wednesday. The yield has come down the last couple of weeks after weaker-than-expected July U.S. job market data fueled speculation that the Fed will cut its main short-term interest rate next month.

Potential Impact of Fed Rate Cut

A Fed rate cut could give the job market and overall economy a boost, but it could also fuel inflation just as President Trump’s tariff policies risk raising prices for U.S. consumers. Higher inflation could push bond yields higher, driving mortgage rates upward in turn, even if the Fed cuts its key rate.

Forecasts for Mortgage Rates

Economists generally expect the average rate on a 30-year mortgage to remain above 6% this year. Recent forecasts by Realtor.com and Fannie Mae project the average rate will ease to around 6.4% by the end of this year. “Homebuyers who have been relegated to the sidelines by high financing costs got some encouragement in the past two weeks, but it remains to be seen if it’s enough to get more of them back in the game,” said Joel Berner, senior economist at Realtor.com.

Increase in Mortgage Applications

Mortgage applications jumped 10.9% last week from the previous week as rates eased, according to the Mortgage Bankers Association. But much of the increase was due to homeowners applying for loans to refinance their mortgage. Such loan applications made up nearly 47% of all applications and led to a 23% surge in overall in refi applications compared to a week earlier — the strongest week for refinance applications since April. Meanwhile, applications for adjustable-rate mortgages, or ARMs, soared 25% to their highest level since 2022, MBA said.

By ALEX VEIGA, AP Business Writer

MCLEAN, Va. (AP) —

Originally Published: August 14, 2025 at 12:10 PM EDT

## Conclusion
The drop in the average rate on a 30-year mortgage to its lowest level since October is a welcome development for prospective homebuyers. However, it remains to be seen whether this will be enough to boost the stagnant housing market. With economists forecasting rates to remain above 6% for the year, homebuyers will need to carefully consider their options.

## FAQs
Q: What is the current average rate on a 30-year mortgage?
A: The current average rate on a 30-year mortgage is 6.58%.
Q: How has the mortgage rate changed over the past week?
A: The mortgage rate has fallen from 6.63% to 6.58% over the past week.
Q: What is the main factor influencing mortgage rates?
A: The main factor influencing mortgage rates is the 10-year Treasury yield.
Q: What is the forecast for mortgage rates for the rest of the year?
A: Economists forecast the average rate on a 30-year mortgage to remain above 6% for the year, easing to around 6.4% by the end of the year.
Q: How have mortgage applications been affected by the drop in rates?
A: Mortgage applications jumped 10.9% last week from the previous week as rates eased, with a significant increase in refinance applications.