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Average long-term U.S. mortgage rate drops to 6.19%, lowest level in more than a year

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  Published in House and Home on Thursday, October 23rd 2025 at 12:43 GMT by Detroit News
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U.S. Mortgage Rates Slip to a 1‑Year Low as Inflation Wanes and Borrowers Eye Refunding

The average long‑term U.S. mortgage rate fell to 6.19 percent on Thursday, the lowest level in more than a year, according to the Freddie Mac Mortgage Rate Report. The decline came after a narrow drop in the benchmark 30‑year fixed‑rate mortgage and a steady slide in the 15‑year fixed rate. Analysts say the move reflects a combination of easing inflation, a pause in Federal Reserve rate hikes, and improving credit conditions, all of which are encouraging both new homebuyers and homeowners looking to refinance.

30‑Year Fixed‑Rate Mortgage

The most closely watched mortgage product, the 30‑year fixed‑rate, slipped to 6.20 percent from 6.35 percent the week before—a decline of 0.15 percentage points. This marks the fourth consecutive week of falling rates and the first time the rate has fallen below 6.25 percent since early October 2024. The rate’s downward trajectory mirrors the 10‑year U.S. Treasury yield, which has been sliding from 4.10 percent to 3.92 percent in the same period.

Freddie Mac notes that the 30‑year fixed‑rate has been particularly sensitive to changes in the Treasury market. “When the 10‑year yield dips, the 30‑year fixed rate tends to follow suit because investors can buy Treasury bonds at lower yields and offer mortgages at more attractive rates,” the report explains. The decline is also supported by a modest narrowing of credit spreads, indicating that lenders are feeling more confident in borrower credit quality.

15‑Year Fixed‑Rate Mortgage

The 15‑year fixed‑rate, which is often preferred by homeowners seeking to save on interest over a shorter horizon, fell to 5.52 percent from 5.60 percent a week earlier. The 0.08‑point drop brings the 15‑year rate close to the 5.50‑percent level seen in early March 2024. Freddie Mac cites higher demand for 15‑year mortgages from borrowers with higher incomes and a desire to pay off their loans faster as a key driver of the decline.

Why the Rates Are Falling

The article links to a briefing from the Federal Reserve that confirms the central bank’s policy rate is currently set between 5.25 percent and 5.50 percent, with no immediate plans for further hikes. “The Fed’s forward guidance indicates that we will keep the policy rate steady for the foreseeable future, which reduces uncertainty in the financial markets and puts downward pressure on mortgage rates,” the briefing notes.

In addition, inflation data released earlier in the week showed a modest decline in the Consumer Price Index (CPI). The headline CPI rose 0.3 percent in the month, below the 0.4 percent expectation, and the core CPI—excluding volatile food and energy prices—rose 0.2 percent, near the median forecast. The slower inflationary trend suggests that the Fed may not need to raise rates as aggressively to keep price growth in check, which in turn supports lower mortgage rates.

Impact on the Housing Market

The drop in mortgage rates could revive activity in an otherwise subdued housing market. Freddie Mac’s research division indicates that historically, a decline of 0.5 percent or more in the 30‑year fixed rate can stimulate a 5‑10 percent increase in the number of home purchases. The current 0.15‑point decline, while modest, may still be enough to spur additional demand among buyers who had been on the sidelines.

Refinancing activity is also likely to benefit. The Mortgage Bankers Association (MBA) reports that the average refinance rate for existing 30‑year mortgages dropped to 5.95 percent from 6.10 percent. “We are already seeing a surge in refinancing as borrowers look to lock in lower rates, which will reduce their monthly payment and improve their overall financial flexibility,” says MBA spokesperson Sarah Lin.

The article references an MBA survey that found that 65 percent of U.S. homeowners who are eligible for a refinance are currently considering the option, compared to 48 percent in the prior month. This uptick in refinancing interest could translate into a significant influx of cash into the market, fueling spending on home improvements and related services.

Credit Conditions and Lending Standards

Freddie Mac also notes that the average credit score for mortgage applicants has risen to 736 from 731 in the previous quarter, reflecting tighter lending standards. The tightening of underwriting criteria has been driven in part by a rise in non‑payment defaults reported by banks in the last year. As credit conditions remain relatively stringent, the decline in rates may not translate into a proportionate rise in loan volume, but it does make borrowing more attractive for those who qualify.

Looking Ahead

While the immediate outlook for mortgage rates remains supportive, analysts caution that the trajectory could change if inflationary pressures re‑accelerate or if the Fed signals a shift in its policy stance. “The mortgage market is highly sensitive to Fed policy and Treasury yields, so we will keep a close eye on any developments that could alter the current trend,” notes Freddie Mac’s Senior Economist, Dr. Elena Morales.

In summary, the fall in long‑term U.S. mortgage rates to 6.19 percent represents a modest yet meaningful easing that could bolster both new home purchases and refinancing activity. The interplay between easing inflation, a pause in Fed rate hikes, and improving credit conditions appears to be creating a more favorable environment for borrowers, potentially setting the stage for a rebound in the housing market after a period of relative cooling.