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s of August 31, 2025, mortgage rates have seen a notable decline across various loan types. The 30-year fixed mortgage rate has dropped to 6.57%, a decrease of 10 basis points from last week's average of 6.67%. This marks the lowest mortgage rate in ten months and is driven by expectations of an upcoming Federal Reserve interest rate cut and weakening job growth. Refinancing rates have also decreased, with the 30-year fixed refinance rate falling to 6.79%.

    Key takeaways include:

    * The 30-year fixed mortgage rate has dropped to 6.57% from 6.67% last week.

    * The 15-year fixed mortgage rate has declined to 5.51%.

    * 5-year ARM rates have decreased to 6.73%.

    * Refinance rates have fallen, with the 30-year fixed refinance rate dropping to 6.79%.

    Economic data suggests a high probability (around 91%) of a Fed rate cut in September, which could further reduce mortgage rates. Experts predict that mortgage rates will remain above 6% throughout 2025 and gradually drop in 2026, with forecasts placing the 30-year fixed rate near 6.4% by year-end.

    The current mortgage rates by loan type are as follows:

    * Conforming Loans: 30-Year Fixed (6.57%), 20-Year Fixed (6.31%), 15-Year Fixed (5.51%), 10-Year Fixed (5.79%)

    * Government Loans: 30-Year Fixed FHA (6.25%), 30-Year Fixed VA (6.31%), 15-Year Fixed FHA (5.44%), 15-Year Fixed VA (5.96%)

    Refinance rates have also shown favorable movement, with the 30-year fixed refinance rate falling to 6.79%.

    Mortgage rates today reflect a complex interplay of economic factors, including weaker labor market growth, cooling inflation pressure, and market expectations of Fed action. The expected Fed rate cut is pivotal in shaping mortgage rates, which have remained volatile despite recent declines.

    For borrowers looking at a $300,000 loan amount, the monthly principal and interest payments based on recent versus current rates are as follows:

    * 30-Year Fixed: Last week's rate (6.67%) vs. current rate (6.57%): $1,933 vs. $1,898

    * 15-Year Fixed: Last week's rate (5.63%) vs. current rate (5.51%): $2,448 vs. $2,416

    Even a small decline in rates can translate into significant monthly savings for borrowers.

    Experts predict that mortgage rates will remain above 6% throughout 2025 and gradually drop in 2026, with forecasts placing the 30-year fixed rate near 6.4% by year-end. The Federal Reserve's monetary policy remains the central force behind mortgage rate trends, with its decisions impacting Treasury yields and ultimately influencing mortgage borrowing costs.

    The expected Fed rate cut is a key factor in shaping mortgage rates, which have remained volatile despite recent declines. Market pricing currently indicates an 85-95% probability of a September cut, backed by softening inflation and a cooling labor market.