The average rate on the most common mortgage durations reached their lowest point of 2025 this week, per data released Thursday by Freddie Mac (FMCC) .
Per the government enterprise, the 30-year mortgage rate was 6.58% (down from 6.63% last week). The less-popular 15-year mortgage came in at 5.71% (down from 6.63% last week).
These rates represent the lowest point that we've seen since Oct. 20. At this point, they are just a little higher than their historical average since 1991. And they're likely to go lower.
Why are mortgage rates falling now?
Per Fannie Mae, mortgage rates are “determined by adding a spread to the benchmark 10-year Treasury note.” The 10-year Treasury is a common kind of government bond, which is sold and guaranteed by the U.S. government.
The aforementioned spread is a premium collected by a financial institution in exchange for the risk of lending you money. Those risks consider your background, the state of the mortgage market, and the broader economy. As a result, spreads may vary from borrower to borrower.
However, the real factor influencing America's recent mortgage rates has been the 10-year. Despite the Federal Reserve, America's central bank, cutting interest rates twice last year, the 10-year remained elevated into 2025. As of today at 1:49 p.m. ET, the 10-year stood at 4.287%. (Compare that with the Fed Funds Rate (FFR) of 4.25% to 4.50%.)
The higher yield reflects bond investors' persistent worries about inflation and the U.S. government's debt. These worries have worsened since September, when the 10-year was under 4%, reflecting investor expectations for the Fed to cut interest rates.
Only recently has optimism about rate cuts returned, due to the slowing rate of inflation and a more tepid economic environment. In September, the Fed is said to weigh a 25 basis point (0.25%) rate cut, which could affect the 10-year.
Where are interest rates going from here?
The Fed is expected to entertain up to a half dozen rate cuts between now and the end of 2026, contingent on the state of economy. The central bank's ‘dual-mandate' emphasizes maximizing employment, while maintaining low inflation. If either of those things are threatened, it could change the track of the Fed's cuts. And with that, the 10-year.
Lower interest rates are expected to revive the housing market, which has stagnated in the face of still-high rates and sky-high home valuations. Some right-sizing has happened in recent quarters, reflecting the weaker homebuying demand. Per data from FRED, median sales price for homes are down from an all-time high of $442,600 (in Q4 2022). In Q2 2025, median sales prices were $410,800. That's a 7.2% decline.
Still, homeowners are seeking top dollar from buyers. But with rates where they are, there aren't very many capable or interested buyers left. As a result, homes have been taking longer to sell. Some homeowners have taken their listings down, as a result. Data from Redfin shows that home sales were down 1.3% year-over-year in June, while newly-listed homes are down 3.4% YoY.
