Average long-term US mortgage rate slips to 6.27%, nearing a low for
2025
[October 17, 2025] By
ALEX VEIGA
The average rate on a 30-year U.S. mortgage declined again this week,
easing to just above its lowest level this year.
The average long-term mortgage rate slipped to 6.27% from 6.3% last
week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate
averaged 6.44%.
The latest dip brings the average rate to just above 6.26%, where it was
four weeks ago after a string of declines brought down home loan
borrowing costs to their lowest level since early October 2024.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners
refinancing their home loans, also eased this week. The average rate
dropped to 5.52% from 5.53% last week. A year ago, it was 5.63%, Freddie
Mac said.
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. They generally follow the
trajectory of the 10-year Treasury yield, which lenders use as a guide
to pricing home loans.
The 10-year yield was at 4.02% at midday Thursday, down from around
4.14% the same time last week.
Mortgage rates started declining in July in the lead-up to the Federal
Reserve’s decision last month to cut its main interest rate for the
first time in a year amid growing concern over the U.S. job market.
At their September policy meeting, Fed officials forecast that the
central bank would reduce its rate twice more this year and once in
2026. Still, the Fed could change course if inflation jumps amid the
Trump administration’s expanding use of tariffs and the recent trade war
escalation with China.
Even if the Fed opts to cut its short-term rate further that doesn’t
necessarily mean mortgage rates will keep declining. Last fall, after
the Fed cut its rate for the first time in more than four years,
mortgage rates marched higher, eventually reaching just above 7% in
January this year.
“Looking ahead to the rest of the year, it is difficult to forecast
where rates will go, but the likely bet is that they are not going to
fall much further,” said Lisa Sturtevant, chief economist at Bright MLS.
“Buyers who think they want to wait for lower rates could find
themselves facing higher prices but without an improvement in mortgage
rates.”
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A for sale sign stands outside a single-family residence on the
market May 22, 2024, in southeast Denver. (AP Photo/David Zalubowski,
File)
 The average rate on a 30-year
mortgage has remained above 6% since September 2022, the year
mortgage rates began climbing from historic lows. The housing market
has been in a slump ever since.
Sales of previously occupied U.S. homes sank last year to their
lowest level in nearly 30 years. So far this year, sales are running
below where they were at this time in 2024.
Still, many homeowners who bought in recent years after rates
climbed above 6% have sought to refinance their home loan to a lower
rate as mortgage rates have come down in recent weeks.
Mortgage applications, which include loans to buy a home or
refinance an existing mortgage, fell 1.8% last week from a week
earlier, according to the Mortgage Bankers Association. But
applications for mortgage refinance loans made up 53.6% of all
applications, a slight increase from the previous week.
Many prospective homebuyers are also turning to adjustable-rate
mortgages. Such loans, which typically offer lower initial interest
rates than traditional 30-year, fixed-rate mortgages, accounted for
9.3% of all mortgage applications last week.
Mortgage rates will have to drop below 6% to make refinancing an
attractive option to a broader swath of homeowners, however. That’s
because about 80% of U.S. homes with a mortgage have a rate below 6%
and 53% have a rate below 4%, according to Realtor.com.
Economists generally forecast the average rate on a 30-year mortgage
to mostly remain near the mid-6% range this year.
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