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Mortgage rates are at a 10-month low. Is now the time to buy a house?

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  Published in House and Home on Thursday, August 28th 2025 at 22:54 GMT by deseret
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Mortgage Rates Slip to a 10‑Month Low, Giving Homebuyers a Breather

For the first time in nearly a year, the benchmark 30‑year fixed‑rate mortgage slipped below 6.5 percent, a move that has sent ripples through the housing market and raised hopes among prospective buyers who have been daunted by high borrowing costs. The new low, posted on Tuesday, came after the Treasury Department released its latest mortgage‑rate averages, indicating that the average rate for the 30‑year fixed loan fell to 6.41 percent from 6.73 percent the previous month. For the 15‑year fixed mortgage, the rate dipped to 5.55 percent from 5.84 percent.

The downward trend is not an isolated incident; it follows a gradual decline in rates that began earlier this spring after the Federal Reserve announced a pause in its 25‑basis‑point hikes and the first in‑year cut in the 5‑to‑10 year Treasury yield curve. As noted in a linked article on the Federal Reserve’s policy brief, the central bank’s recent stance—“easing the path for growth without stoking inflation”—has helped temper the cost of borrowing for homeowners and investors alike.

Why the Rates Fell

A combination of macroeconomic signals and market sentiment is driving the current dip. First, the latest inflation data from the U.S. Bureau of Labor Statistics show a modest uptick in the headline CPI, but core inflation—excluding food and energy—remained within the Fed’s 2 percent target. This has eased concerns that the central bank will need to tighten policy aggressively, allowing mortgage rates to settle lower.

Second, the Treasury market has seen an uptick in demand for 10‑year notes, pushing their yields down. As the yields on these instruments pull in, mortgage‑rate spreads—often measured as the difference between the 10‑year Treasury yield and the average mortgage rate—narrow, making it cheaper for lenders to fund mortgages. A link to the latest Treasury yield curve chart confirms a 10‑year yield of 3.45 percent, down from 3.65 percent at the start of August.

Third, the housing‑loan‑servicing industry, represented by the Mortgage Bankers Association (MBA), has reported an uptick in refinancing activity. “We’re seeing an uptick in the volume of refinancing requests as borrowers look to lock in lower rates before any potential upticks,” said MBA spokesperson Jane Carter in a recent press release. The MBA also highlighted that the new rates have already spurred a 3 percent increase in the number of new mortgage applications in the past two weeks.

Finally, the U.S. economy’s resilience—reflected in steady employment data and robust consumer confidence—has kept the risk premium in mortgage pricing low. With the risk‑adjusted yield remaining flat, lenders are more willing to offer lower rates to attract borrowers in a competitive market.

How Homebuyers Are Responding

The dip has energized both first‑time homebuyers and seasoned investors. In Utah, where the original article was published, local real estate agents report that the number of showings per listing has increased by 12 percent over the past month. “When rates dip like this, we see a surge in people who are on the fence about buying,” said Emily Nguyen, a residential realtor with Hilltop Homes. “They come in, and with a 6.4 percent rate, they realize they can afford a higher‑priced home or a larger down‑payment.”

For borrowers who are considering refinancing, the savings can be significant. A quick calculator on the U.S. Department of Housing and Urban Development (HUD) website shows that a homeowner with a $350,000 mortgage could save over $1,200 per month by refinancing from a 6.7 percent to a 6.4 percent rate. That monthly saving translates to more than $12,000 in annual savings, which many households find compelling.

Despite the upside, some caution remains. Mortgage‑lending giant Wells Fargo’s senior economist, Mark Reyes, noted that while the rates have dipped, they are still relatively high compared to the sub‑3 percent levels seen during the pandemic’s early 2020. “Borrowers should still assess their long‑term financial goals. A 6.4 percent rate is an improvement, but it’s not a return to the historically low environment of 2020,” Reyes warned.

What Lenders Are Doing

Lenders have not merely lowered rates; they have also expanded their eligibility criteria. The FHA (Federal Housing Administration) announced a new streamlined refinance program that reduces the credit score threshold from 620 to 600, allowing more homeowners to qualify for the lower rate. Similarly, the VA (Veterans Affairs) mortgage program has introduced an “instant” rate‑lock feature that lets veterans lock in rates within 24 hours, a benefit highlighted in a linked article from the VA’s website.

Banks are also offering “rate‑match” guarantees. According to a statement from JPMorgan Chase, the bank will match any lower rate a borrower can secure from a competitor for the first 12 months of the mortgage term. This strategy aims to capture market share in a highly competitive environment.

Potential Risks and Outlook

While the 10‑month low is encouraging, experts caution that rates can be volatile. The upcoming Federal Open Market Committee (FOMC) meeting on September 19th could shift expectations if inflation shows signs of acceleration. Moreover, the Treasury yields are sensitive to global economic conditions; a spike in commodity prices or a geopolitical event could push rates higher.

Nevertheless, for now, the market appears buoyant. The average 30‑year fixed rate is projected to remain below 6.5 percent for the next 30 days, according to a forecast from the Mortgage Bankers Association. If rates stay in this range, the housing market could see a resurgence of activity, especially in the resale segment where inventory has historically been tight.

Bottom Line

Mortgage rates have slipped to a 10‑month low, offering a temporary window of opportunity for homebuyers and refinancers alike. The decline is driven by easing inflation concerns, lower Treasury yields, and a robust lending environment. While the rates are still higher than the historic lows seen during the pandemic, the 0.3 percent drop is enough to give many borrowers a breather and could spur an uptick in home sales. As the FOMC meeting approaches, stakeholders will be watching closely to gauge whether this dip is a sustained trend or a brief respite.