Average rate on a 30-year mortgage falls again, dips to lowest level
since early October
[September 19, 2025] By
ALEX VEIGA
The average rate on a 30-year U.S. mortgage fell again this week,
echoing a decline in long-term U.S. Treasury bond yields ahead of the
Federal Reserve’s first rate cut this year.
The rate eased to 6.26% from 6.35% last week, mortgage buyer Freddie Mac
said Thursday. A year ago, the rate averaged 6.09%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners
refinancing their home loans, also fell. The average rate slipped to
5.41% from 5.5% last week. A year ago, it was 5.15%, 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.
Rates generally follow the trajectory of the 10-year Treasury yield,
which lenders use as a guide to pricing home loans. The yield was at
4.12% in midday trading Thursday, up from 4.06% late Wednesday.
Mortgage rates have been mostly declining since late July amid
expectations that Fed would cut rates for the first time since last
year. As expected, the central bank delivered a quarter-point cut
Wednesday and projected it would lower its benchmark rate twice more
this year, reflecting growing concern over the U.S. job market.
The average rate on a 30-year mortgage is now at its lowest level since
Oct. 3, when it was 6.12%.
The late-summer slide in mortgage rates has been a welcome trend for the
housing market, which has been in a slump since 2022, when mortgage
rates began climbing from historic lows. Sales of previously occupied
U.S. homes sank last year to their lowest level in nearly 30 years and
have remained sluggish so far this year as the average rate on a 30-year
mortgage has mostly hovered above 6.5%.
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 “Mortgage rates have eased into the
low 6% range, a shift that should support a modest pickup in home
sales in the coming months,” said Jiayi Xu, senior economist with
Realtor.com. “However, the broader impact will remain limited, as
81% of homeowners still hold mortgages below 6%, reducing incentives
to sell or move.”
Still, the pullback in mortgage rates has led to a surge in
homeowners who bought in recent years after rates climbed above 6%
to refinance now to a lower rate.
Mortgage applications, which include loans to buy a home or
refinance an existing mortgage, jumped nearly 30% last week from the
previous week, according to the Mortgage Bankers Association.
Applications for mortgage refinancing loans made up nearly 60% of
all applications last week.
Demand for adjustable-rate mortgages, or ARMs, is also up sharply.
Applications for ARMs accounted for about 13% of all loan
applications. That’s the biggest share since 2008, in the aftermath
of the 2000s housing bust.
The Fed's rate cut makes ARMs more attractive, as the rates on those
loans closely follow the central bank's action on short-term
interest rates, said Bill Banfield, chief business officer at
mortgage lender Rocket Cos.
“For consumers, it’s another signal that the cost of borrowing is
gradually moving lower,” Banfield said.
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