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s of August 30, 2025, mortgage rates have dropped significantly, with the national average 30-year fixed mortgage rate falling to 6.53%, a 10-month low. This decline is attributed to weakening job growth and persistent but slowing inflation. Refinance rates have also experienced a slight decrease, with the 30-year fixed refinance rate dropping to 6.82%.

    Lower mortgage and refinance rates can improve affordability and may encourage some buyers to enter the housing market. The Federal Reserve's expected interest rate cut in September 2025 could push mortgage rates lower soon. Despite the recent drop, mortgage rates remain above 6%, with projections estimating rates will stay elevated through 2025 and ease slowly into 2026.

    Purchase demand is rising as lower rates improve buyer affordability despite ongoing challenges. Government loan rates (FHA and VA) have also declined but remained competitive. The long-term outlook suggests mortgage rates around 6.1% by 2026, but not below until at least Q3 2026.

    Mortgage rates in the U.S. have seen a meaningful pullback this week, marking a trend downward after a period of relative stability. Zillow's latest figures reveal:

    * 30-year fixed mortgage rate: 6.53% (↓ 0.14)

    * 20-year fixed mortgage rate: 6.31% (↓ 0.12)

    * 15-year fixed mortgage rate: 5.64% (↓ 0.13)

    * 10-year fixed mortgage rate: 5.79% (no change)

    * 7-year ARM: 7.04% (↓ 0.15)

    * 5-year ARM: 6.83% (↓ 0.30)

    Refinance rates have also declined, with the current national average 30-year fixed refinance rate decreasing to 6.82%. The 15-year fixed refinance rate edged up slightly to 5.61%, and the 5-year ARM refinance rate held steady at 7.28%.

    The Fed's interest rate policies are closely tied to mortgage rates, with expectations of a September 2025 rate cut likely to drive mortgage rates down further in the coming months. This expected cut could push mortgage rates closer to or just below 6% by year-end.

    Lower rates have already sparked increased purchase demand as buyers take advantage of improving affordability. However, affordability challenges remain due to still high prices and other factors. Experts project that despite recent drops, mortgage rates will generally remain above 6% until at least Q3 2026, with forecasted rates around 6.5% by year-end 2025 and falling gradually thereafter.

    A $350,000 home loan over 30 years illustrates the impact of rate changes on payments:

    * At 6.67% (last week): $2,240/month

    * At 6.53% (today): $2,218/month

    * At 6.30% (projected): $2,155/month

    This $0.14 percentage point drop to 6.53% saves about $22 a month, or roughly $260 a year. Further declines could lead to even more savings.

    The Federal Reserve's September 16-17 meeting is pivotal, with expectations high for the first rate cut of the year. Fed Chair Jerome Powell's speech at Jackson Hole on August 22 will be analyzed for clues. A rate cut could push mortgage rates closer to or just below 6% by year-end.

    Mortgage rates impact more than homebuyers, boosting consumer spending by lowering debt servicing costs and spurring business investment due to cheaper financing.