Are Mortgage Interest Rates on the Decline?
By Chris Petry
Interest rates, interest rates, interest rates. It seems no single topic has elicited more debate over the last four years, particularly in the world of real estate. First came the pandemic. Which, understandably, stoked a great deal of uncertainty in the market. That said, the calendar years of 2020 and 2021 saw record numbers of transactions. Listings and sales, upsizings, downsizings and relocations. The pandemic forced people to reassess their priorities and the rise of remote working, coupled with the then-historically low interest rates, spurred a market frenzy the likes of which no one had ever seen.
Of course, nothing lasts forever. Eventually the demand vs. inventory race drove up home prices, affordable inventory plateaued, the costs of everyday goods and services began to consume a greater percentage of the average consumer’s budget, market confidence declined and interest rates crept upward. Everyone, us included, wrote multiple articles trying to alleviate the concerns of consumers. “Sure 8% looks high when compared to the rates of 2020-2021 but, historically, it’s been a lot worse!” Of course, that is true but it’s hardly consolatory to folks who were considering selling. After all, they were locked into a 3% interest rate on their current home and knew if they moved, they’d have to accept a higher rate on the new mortgage. First time homebuyers were faced with higher starting home prices and high interest rates.
The good news? Rates are coming down. Slower than most would like, sure, but they are coming down. In September, 2024, the Fed implemented a half percentage rate cut. The first in almost three years. Shortly after, in November of last year, they made an additional cut of .25 or ¼ of a percent. A month later, it was cut by ¼ of a percentage point yet again. After three consecutive cuts, the Fed locked rates at the beginning of the current calendar year and everyone’s been watching with bated breath ever since.
Enter August, 2025. This article courtesy of the National Association of REALTORS, reports that the 30-year fixed mortgage rate from Freddie Mac decreased to 6.63%, down 6.72% from the week before the publication of the report. Despite the fact the Federal Reserve is holding steady at the moment, this slight change has seemingly resulted in an increase in mortgage loan applications. As the article mentions, rates are still in the mid 6% range. So, down from recent highs but still twice the rates consumers had access to a few years back.
Could the Federal Reserve lower rates in the coming weeks? Recent reports indicate that while there’s still a degree of trepidation, recent inflation reports might just give officials the extra push they were looking for to enact a new cut. So, let’s cross our fingers!
In conclusion, rates seem to be moving in the right direction for consumers. Which is to say, down. Though the rate of increases is a little slower than most would like it. Rates are certainly down from October 2023’s 7.79% high. Are more cuts coming? It looks like it. If the increase in mortgage loan applications is any indication, buyers and sellers look ready to move. Pun intended.
