Average rate on a 30-year mortgage holds steady at lowest level in
nearly 10 months
[August 22, 2025] By
ALEX VEIGA
The average rate on a 30-year U.S. mortgage held steady this week at its
lowest level in nearly 10 months, an encouraging sign for prospective
homebuyers who have been held back by stubbornly high home financing
costs.
The long-term rate was unchanged from last week at 6.58%, mortgage buyer
Freddie Mac said Thursday. A year ago, the rate averaged 6.46%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners
refinancing their home loans, edged lower. The average rate dropped to
5.69% from 5.71% last week. A year ago, it was 5.62%, Freddie Mac said.
Stubbornly high 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 and have remained sluggish
this year.
For much of the year, the average rate on a 30-year mortgage has hovered
relatively close to its 2025 high of just above 7%, set in mid-January.
Since last week, the average rate has been 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.
The main barometer is the 10-year Treasury yield, which lenders use as a
guide to pricing home loans. The yield was at 4.34% at midday Thursday,
up from 4.29% late Wednesday.
The yield has been mostly rising this month as bond traders weighed how
data on inflation and the job market, and the potential economic impact
of Trump administration’s tariffs, may influence the Fed’s interest rate
policy moves.
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 The central bank has so far been
hesitant to cut interest rates out of fear that Trump’s tariffs
could push inflation higher, but data showing hiring slowed last
month have fueled speculation that the Fed will cut its main
short-term interest rate next month.
A Fed rate cut could give the job market and overall economy a
boost, but it could also fuel inflation, which could push bond
yields higher, driving mortgage rates upward in turn.
“Even if the Fed cuts the short-term federal funds rate in
September, which is largely expected, it is not likely that we will
see a big drop in mortgage rates,” said Lisa Sturtevant, chief
economist at Bright MLS.
Economists generally expect the average rate on a 30-year mortgage
to remain near the mid-6% range this year.
That may not be low enough to spur a meaningful increase in home
sales.
While the housing market slowdown is forcing many sellers to lower
their asking price and even pay for a buyer’s closing costs, among
other incentives, affordability remains a major hurdle for many
aspiring homeowners.
Home price growth has slowed nationally, but the median sales price
of a previously occupied U.S. home remains near the all-time high of
$435,300 set in June. And while prices are down from a year ago in
many metro areas in the South and West such as Miami, Denver and
Austin, they haven’t come down nearly enough to offset years of
soaring prices.
“Lower mortgage rates and slower price growth — or even
year-over-year price declines — is going to be necessary to improve
affordability and bring more homebuyers into the market,” Sturtevant
said.
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