Aspiring homeowners and those looking to refinance have been dreaming of mortgage rates to go down, and their dreams might (gradually) be coming true. Mortgage interest rates decreased again this week, and the average 30-year fixed rate is down 17 basis points over the last month. However, the rate is still nine points higher than it was last year this week. These mixed results could leave potential home buyers wondering, “Is this a good time to buy a house?”
Now could be a good time to buy, as far as interest rates go, because experts don’t expect rates to plummet before the end of the year. If you want to buy, you need a strong financial footing, a decent-sized down payment, and a focus on lower fees to partly compensate for the higher initial mortgage rate. And remember, you can always refinance your mortgage later.
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As of August 14 this year, Freddie Mac reported that rates for 30-year fixed-rate mortgages were 6.58%. This means that, although they’ve dropped five basis points since last week, they’re still up nine basis points since last August. This time last year, mortgage rates were averaging 6.49%.
Considering rates are still above 6.5%, we get it if you feel like you can’t catch a break in the current economy
In situations like these, it pays to look at the numbers. Here’s the Freddie Mac data on mortgage rates for the past 52 weeks as of August 7, 2025:
If you just go by the numbers, rates on both 30-year and 15-year fixed-rate mortgages remain mostly below the highs noted above. So, yes, mortgage rates have decreased incrementally over the past year. Will they keep dipping? That remains to be seen.
Dive deeper: Will mortgage rates go back up to 7%?
If you’re looking for a substantial interest rate drop in 2025, you’ll likely be left waiting. The latest news from the Federal Reserve and other key economic data point toward steady mortgage rates on par with what we see today.
When the Fed — the common nickname for the Federal Open Market Committee (FOMC) — held its July 2025 meeting, it voted to keep the federal funds rate the same for the time being. After cutting its rate three times at the end of 2024, it has yet to slash the rate in 2025.
That federal funds rate tends to directly influence rates on shorter-term lending. While mortgage rates aren’t directly based on the fed funds rate, they typically mirror fed fund rate trends. So, if the fed funds rate goes up, mortgage rates will likely follow. The inverse is also true.
The next Fed meeting is set for September 16 and 17. According to the CME FedWatch tool, there’s roughly an 87% chance that the fed funds rate will decrease at this meeting. If this remains the expectation, mortgage rates will probably go down in the weeks leading up to the meeting. However, the decision is well over a month away, so take this outlook with a grain of salt. A lot can happen before mid-September to impact the Fed’s decision.
Learn more: How the Fed rate decision impacts mortgage rates
While short-term lending rates closely follow the fed funds rate, mortgage rates more closely follow the 10-year Treasury yield. As of August 12, the 10-year Treasury yield sat at 4.29% — up from 3.90% a year prior.
You’re probably wondering why today’s mortgage rates aren’t in the 4% range, right?
To determine current mortgage rates, lenders add a “spread” to the 10-year Treasury yield. The spread is simply the difference between the rates consumers pay and the rate on the 10-year Treasury. Without getting too much into the weeds, charging a spread helps mortgage lenders cover costs associated with making loans to the public and the risk of providing such loans.
For example, today, the average 30-year fixed mortgage rate is 6.58%, and the 10-year Treasury yield is 4.29% — a spread of 2.29%.
Read more: When will mortgage rates finally go back down to 5%?
In short, no. You probably shouldn’t wait to buy a home until mortgage rates drop. Mortgage rates are just one part of the affordability equation. You also have to consider home prices, a factor of housing supply and demand.
The current housing market is in a crunch. To put it simply, buyers outnumber homes for sale, especially homes in price ranges accessible to the first-time home buyer. When supply and demand are out of balance like this, home prices tend to remain high since sellers know they’ll have multiple buyers interested.
According to data from the Federal Reserve Bank of St. Louis, the median sale price of single-family homes has generally trended upward since Q1 of 2009. At that time, the median sale price was $208,400. The median price had risen to $410,800 by Q2 2025.
While recession chatter has recently increased, prospective buyers likely won’t see much relief in a true recession. If interest rates drop like they tend to do in recessions, that will increase the number of people looking to buy and lock in a lower interest rate. That drives up demand for the already limited supply of homes.
To truly save, buyers need both interest rates and home prices to drop. Mortgage rates are inching down this month, and housing prices are stagnant or even lowering in certain parts of the country. Still, rates are higher than they were this time last year, and prices are still increasing in many cities. Situations may be improving for buyers, but there’s a lot of work to be done.
Keep reading: Do mortgage rates go down in a recession?
If you crave the comforts of homeownership, the best strategy in today’s market may be to buy what you can afford. Whether that means a smaller house or a condo instead of a single-family home, owning something puts you in a position to start building equity.
Yes, shopping for the best mortgage lenders with low rates and fees is crucial when getting a mortgage. But to help you find your ideal home that balances affordability and desirability, it pays to adopt a curious mindset and consider lesser-discussed financial tools.
There’s no better time to learn more about your local real estate market than today. By adopting a sense of curiosity, you could discover that your city has more to offer housing-wise than you previously thought.
You may want to take weekend excursions to lesser-known neighborhoods and suburban developments beyond the city limits. You never know what you’ll find that could expand your idea of what “home” looks like — including new developments, school districts, and types of homes.
Learn more: This map shows average mortgage rates by state
If you’re looking to spend less on a home in today’s mortgage market, a house needing a bit of TLC could help you do just that. Loans like the FHA 203(k) mortgage can roll your purchase and renovation costs into one convenient loan. When you qualify and have an accepted offer, your lender immediately funds the home’s purchase price and puts the cost of renovations into an escrow account. As you make repairs, funds get dispersed.
How would it feel to have a longer commute yet come home to a house you love? Master-planned communities tend to crop up outside major cities, offering amenities like parks, shopping, and top-notch schools — all in exchange for a longer commute. These areas could look a lot more palatable if they offer commuting options like park-and-ride or commuter rail. Dare to consider parking the car and taking public transit if it could get you into the home of your dreams.
While shared walls, floors, and ceilings might not immediately scream “dream home,” they could help you find an affordable home in a terrific area. Condominiums come in various shapes and sizes, from apartment-style flats to townhomes. Depending on the area, you might even score a small backyard. However, be sure to consider HOA fees when calculating your monthly payment.
While the monthly payment on a 15-year mortgage will be higher than the typical 30-year, these loans have plenty of upsides. Not only will you pay off your home on a speedier timeline, but you’ll also likely score a lower interest rate and save a ton on interest over the life of your loan.
To make today’s mortgage rates more palatable, look into rate buydown options. An interest rate buydown lets you pay cash up front in exchange for a reduced interest rate on your mortgage. Buydowns can be permanent or temporary (for your loan’s first one to three years, for example). Even a few years of lower rate relief can make today’s home prices more affordable.
Learn more: What will mortgage rates do over the next five years?
Mortgage rates probably won’t drop significantly before autumn. The July Fannie Mae and Mortgage Bankers Association forecasts predict that rates will continue to gradually decrease but will stay above 6% throughout 2025 and 2026.
Compared to historical mortgage rates, 7% isn’t considered a high rate. While it might be high compared to pandemic-era rates that were sub-3%, it’s on par with mortgage rates in the 1990s, and considerably lower than the double-digit rates seen in the late 1970s and early 1980s.
It’s not impossible to get a 3% interest rate, but doing so requires the perfect set of circumstances. You’d need to find a homeowner with an assumable mortgage — one that can be passed to a new owner at the same interest rate as the original loan. Assumable mortgages are generally government-backed loans from agencies like the VA, FHA, or USDA.
Laura Grace Tarpley edited this article.
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