Borrowing costs ease slightly, sparking a wave of refinances while homebuyers watch for further shifts
Mortgage rates in the US have declined for the fourth straight week, hitting their lowest point of 2025 and offering a glimmer of hope for homebuyers and refinancers.
Freddie Mac reported Thursday that the average 30-year fixed mortgage rate fell to 6.87%, a slight dip from 6.89% the previous week.
Despite the gradual declines, borrowing costs remain close to 7%, a level that continues to deter many potential homebuyers and slow housing transactions. However, the recent stability in rates could help improve market conditions, according to Freddie Mac chief economist Sam Khater.
“Purchase demand is stronger than this time last year,” Khater said in the report. “This is an indication that a thaw in buyer activity could be on the horizon.”
Although the decline in mortgage rates has been modest, it has not gone unnoticed—especially by those who bought homes in late 2023, when rates were even higher.
Holden Lewis, a home and mortgage expert at NerdWallet, pointed out that homeowners who locked in mortgages above 7% last fall are now taking advantage of lower rates by refinancing.
“Mortgage rates have fallen four weeks in a row, but so gradually that you would think that scarcely any borrower would notice,” he said. “But borrowers who bought homes in fall 2023, when rates were well above 7%, have paid attention; we're seeing a mild surge in refinances. With mortgage rates relatively stable, more would-be buyers might feel confident enough to test the market as home buying season begins.”
While the decline has sparked some optimism among potential buyers, affordability remains a challenge in many markets. Home prices continue to rise, and the Federal Reserve’s approach to interest rates remains uncertain.
The Fed’s stance continues to shape the outlook for mortgage rates, and recent inflation data suggests that the central bank may not be in a hurry to cut rates further.
A key consumer price index (CPI) measure showed the biggest monthly increase since August 2023, reinforcing expectations that the Fed will hold off on additional rate cuts in the near term. Federal Reserve Chair Jerome Powell acknowledged that progress has been made in curbing inflation but emphasized that the fight is not over.
“We’re not quite there yet,” Powell told Congress on Wednesday.
This means homebuyers shouldn’t expect major relief from high mortgage rates anytime soon, according to Joel Berner, senior economist for Realtor.com.
“Prospective homebuyers should not expect much relief from high mortgage rates in the near future,” Berner said. “The days of sub-4% mortgage rates are over, and if inflation continues to resist being stamped out, they may not be back for a long time.”
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