Mortgage rates just hit 2025 lows
The average rate on the most common mortgage durations reached their lowest point of 2025 this week, per data released Thursday by Freddie Mac () .
Per the government enterprise, the 30-year mortgage rate was 6.58% (down from 6.63% last week). The less-popular 15-year mortgage came in at 5.71% (down from 6.63% last week).
These rates represent the lowest point that we've seen since Oct. 20. At this point, they are just a little higher than their historical average since 1991. And they're likely to go lower.
Why are mortgage rates falling now?
Per Fannie Mae, mortgage rates are "determined by adding a spread to the benchmark 10-year Treasury note." The 10-year Treasury is a common kind of government bond, which is sold and guaranteed by the U.S. government.
The aforementioned spread is a premium collected by a financial institution in exchange for the risk of lending you money. Those risks consider your background, the state of the mortgage market, and the broader economy. As a result, spreads may vary from borrower to borrower.
However, the real factor influencing America's recent mortgage rates has been the 10-year. Despite the Federal Reserve, America's central bank, cutting interest rates twice last year, the 10-year remained elevated into 2025. As of today at 1:49 p.m. ET, the 10-year stood at 4.287%. (Compare that with the Fed Funds Rate (FFR) of 4.25% to 4.50%.)
The higher yield reflects bond investors' persistent worries about inflation and the U.S. government's debt. These worries have worsened since September, when the 10-year was under 4%, reflecting investor expectations for the Fed to cut interest rates.
Only recently has optimism about rate cuts returned, due to the slowing rate of inflation and a more tepid economic environment. In September, the Fed is said to weigh a 25 basis point (0.25%) rate cut, which could affect the 10-year.
Where are interest rates going from here?
The Fed is expected to entertain up to a half dozen rate cuts between now and the end of 2026, contingent on the state of economy. The central bank's 'dual-mandate' emphasizes maximizing employment, while maintaining low inflation. If either of those things are threatened, it could change the track of the Fed's cuts. And with that, the 10-year.
Lower interest rates are expected to revive the housing market, which has stagnated in the face of still-high rates and sky-high home valuations. Some right-sizing has happened in recent quarters, reflecting the weaker homebuying demand. Per data from FRED, median sales price for homes are down from an all-time high of $442,600 (in Q4 2022). In Q2 2025, median sales prices were $410,800. That's a 7.2% decline.
Still, homeowners are seeking top dollar from buyers. But with rates where they are, there aren't very many capable or interested buyers left. As a result, homes have been taking longer to sell. Some homeowners have taken their listings down, as a result. Data from Redfin shows that home sales were down 1.3% year-over-year in June, while newly-listed homes are down 3.4% YoY.
Mortgage rates just hit 2025 lows first appeared on TheStreet on Aug 14, 2025
This story was originally reported by TheStreet on Aug 14, 2025, where it first appeared.
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