Mortgage rates fall to lowest level since October

But home prices continue to go up

By Mark Huffman of ConsumerAffairs

August 15, 2025

• Mortgage rates fell to their lowest level since October, with the 30-year fixed-rate mortgage averaging 6.58% and the 15-year averaging 5.71%, boosting affordability and purchase activity.

• Declining rates have lowered the median monthly mortgage payment to $2,631, a seven-month low, giving buyers with a $3,000 budget about $20,000 more purchasing power compared to Mays peak rates.

• Despite lower borrowing costs, home prices continue to climb, with the median home price reaching $396,000 in August, up 2.1% year over year, marking the fastest price growth since early April.

Mortgage rates continue to fall and this week hit their lowest level of 2025. Freddie Mac reports its Primary Mortgage Market Survey shows the 30-year fixed-rate mortgage (FRM) averaged 6.58% this week.

Mortgage rates fell to their lowest level since October, said Sam Khater, Freddie Macs chief economist. Purchase application activity is improving as borrowers take advantage of the decline in mortgage rates.

Latest rates

• The 30-year FRM averaged 6.58% as of August 14, 2025, down from last week when it averaged 6.63%. A year ago at this time, the 30-year FRM averaged 6.49%.

• The 15-year FRM averaged 5.71%, down from last week when it averaged 5.75%. A year ago at this time, the 15-year FRM averaged 5.66%.

The decline in rates helps offset the continued rise in median home prices, improving affordability. Real estate broker Redfin reports the median monthly mortgage payment fell to a seven-month low of $2,631 during the four weeks ending August 10, down $215 from its May peak of $2,846. Last week marked the 12th consecutive week that monthly payments either dropped or stayed flat.

That means that a buyer on a $3,000 monthly budget gained roughly $20,000 in purchasing power since mortgage rates hit a recent peak of 7.08% in May.

Limited window

The mortgage rates that buyers can lock in today have already priced in the likelihood that the Fed will cut rates on September 17, said Redfins head of economics research Chen Zhao. That means that mortgage rates are unlikely to drop any further when the Fed actually makes the expected cut. And the window to snag a mortgage rate in the mid-6s may be limited: Increased rate volatility is expected in coming weeks as new economic data is released.

But while rates are beginning to favor buyers, prices arent. According to Redfin, the median home price grew to $396,000 during the four weeks ending August 10, up 2.1% year over year, the fastest growth since early April.

Last week was the fifth consecutive week that price growth gained steam after dropping to a two-year low in early July.

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