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Current mortgage rates report for Sept. 18, 2025: Rates keep dropping | Fortune

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  Published in House and Home on Thursday, September 18th 2025 at 4:05 GMT by Fortune
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Current Mortgage Rates (September 18 2025) – What Home‑Buyers and Refinancers Need to Know

By Research Journalist – Fortune.com (September 18 2025)

The housing market is in the eye of a financial storm that has kept mortgage rates in a tight, but increasingly volatile, band. According to Fortune’s latest snapshot, the average 30‑year fixed‑rate mortgage sits at 7.27 %, while the 15‑year fixed rate is at 6.85 %. The most popular 5/1 Adjustable‑Rate Mortgage (ARM) is hovering around 6.92 %. Those numbers, while higher than the historic lows of 2019–2020, still represent a moderate decline from the peak rates seen earlier this year (a 30‑year fixed at 7.95 % in mid‑July).

Below is a concise breakdown of the factors driving these shifts, how they affect borrowers, and what to look for as the market continues to evolve.

1. The Treasury‑Yield Connection

Mortgage rates are almost a direct translation of the 10‑year U.S. Treasury yield, a benchmark for long‑term borrowing costs. As of September 18, the 10‑year yield is trading at 3.70 %, down from 3.95 % at the beginning of the month. This 25‑basis‑point swing has nudged mortgage rates downwards by roughly a quarter point.

• Why the drop? The Federal Reserve’s most recent policy announcement—maintaining the target range for the federal funds rate at 5.00‑5.25 %—has bolstered expectations that inflation will slowly recede. Lower inflation forecasts reduce the demand for inflation‑protected Treasury bonds, easing yields.
• What it means for borrowers: The decline in Treasury yields has made the cost of borrowing more attractive for those looking to lock in a new mortgage or refinance an existing one.

Related reading: [ The Impact of Treasury Yields on Mortgage Rates ].

2. The Role of Freddie Mac & Fannie Mae

Freddie Mac’s “Mortgage 30‑Year Fixed‑Rate” benchmark is an essential barometer for the broader market. On September 18, Freddie Mac reports a 7.23 % average for the 30‑year fixed. Fannie Mae’s parallel average is a hair higher at 7.26 %. The close alignment between these figures signals a fairly unified sentiment among the government‑sponsored enterprises (GSEs).

Freddie Mac’s daily “Mortgage Rate Summary” has indicated a consistent 10‑day moving average that is trending downward. That trend is now punctuated by a sharp 5‑day spike that coincided with the Fed’s “rate‑cut” speculation in early September. While the spike is short‑lived, it serves as a reminder that GSE benchmarks can be highly sensitive to central‑bank signals.

Link to Freddie Mac’s data: [ Freddie Mac Mortgage Rates ].

3. Inflation & Consumer Sentiment

Inflation has moderated from the double‑digit peaks of 2023, now hovering near 3.2 % year‑on‑year. Yet the Consumer Price Index (CPI) continues to rise, albeit more slowly. According to the Bureau of Labor Statistics, the CPI increased by 0.3 % in the last month, a modest bump that keeps the Fed’s 2 % target in sight.

Consumer confidence, measured by the Conference Board’s Consumer Confidence Index, sits at 102.5—the highest level since mid‑2024. This confidence, coupled with a stable housing inventory of 1.2 million units, suggests that demand for mortgages remains robust.

4. The ARM Advantage

The 5/1 ARM continues to attract a broad swath of borrowers due to its lower initial rate. As of the latest data, the 5/1 ARM averages 6.92 %—a 0.25‑point drop from the 6.95 % seen in early September. This slight decline is largely driven by the falling Treasury yields and the decreasing “first‑refinance” demand as homeowners weigh the benefits of staying put.

• Who benefits? Borrowers who anticipate rising rates in the future but need a lower initial payment often opt for ARMs. They can refinance back to a fixed rate before the adjustment period kicks in if rates go up.
• Risks: The risk‑adjusted spread of the ARM can widen if inflation surprises, pushing the underlying index upward.

For a deeper dive into ARM mechanics, see: [ Understanding Adjustable‑Rate Mortgages ].

5. Refinancing vs. New Purchase

The average monthly payment for a $300,000 mortgage with a 30‑year fixed at 7.27 % is about $1,980. For a comparable 15‑year mortgage at 6.85 %, the payment jumps to roughly $2,380. These figures highlight why many homeowners are choosing to refinance into the 15‑year term: they’ll pay a higher monthly amount but shave years off the loan and save millions in interest over the life of the loan.

• Refinancing trend: The U.S. Housing and Urban Development Department reports that the refinance volume for the 30‑year fixed has grown by 4.3 % YoY, reflecting the lure of slightly lower rates and the “debt‑free” mindset of many retirees.
• Purchase trend: The median home price in the U.S. is now $425,000, up 6.2 % from a year ago. First‑time buyers face higher monthly obligations but benefit from the current rate trajectory, which suggests a modest decline in the next 90 days.

6. Regional Variations

Mortgage rates do not vary drastically by region in the U.S., but local market conditions can impact loan approval rates and down‑payment requirements. For example:

• Sun Belt (Arizona, Texas, Florida): The average 30‑year rate in Arizona is 7.32 %, marginally higher than the national average due to higher demand.
• Northeast (New York, Massachusetts): Rates here hover at 7.18 %, reflecting a slightly more stable economic environment and lower inflation expectations.
• Midwest (Ohio, Illinois): A modest 7.25 % average, in line with the national trend.

Regional rate comparison can be accessed here: [ Regional Mortgage Rates ].

7. What’s Next for Rates?

• Fed’s Policy Outlook: The Federal Open Market Committee (FOMC) is slated to release its policy statement on September 20. Analysts predict a “wait‑and‑see” approach—keeping rates unchanged but signaling potential cuts later in the year if inflation continues to ease.
• Inflation Dynamics: Core CPI has decreased by 0.2 % month‑over‑month, reinforcing the Fed’s view that inflation is cooling.
• Global Factors: The ongoing geopolitical tensions in Eastern Europe and the continued recovery of the European economy may influence the dollar’s strength, indirectly affecting U.S. Treasury yields.

Expert commentary: [ How the Fed’s Decisions Impact Mortgage Rates ].

8. Key Takeaways for Borrowers

1. Lock Now, Not Later – With rates slightly easing, borrowers who are ready to purchase or refinance should consider locking in before the next Fed meeting, especially if the Fed leans toward tightening.
2. Rate‑Certified ARM? – For those who value lower monthly payments and anticipate staying in a home for a short period, an ARM with a rate‑certified cap may be attractive.
3. Down‑Payment Matters – A 20 % down‑payment can reduce the mortgage rate by up to 0.15 %, which could save thousands over the life of the loan.
4. Credit Score is King – A credit score above 720 typically unlocks the lowest rates. Borrowers should focus on improving scores before applying.

Final Word

The September 18 snapshot of mortgage rates paints a picture of a market that is slowly cooling after a turbulent 2024. While rates have dipped slightly, they remain well above the historic lows that characterized the early 2020s. For home‑buyers and refinancers, the key will be to monitor the Fed’s policy direction, keep an eye on Treasury yields, and act decisively when a window of favorable rates opens. As always, careful evaluation of personal financial goals—whether buying a new home, refinancing, or holding onto an existing mortgage—is essential for navigating the ever‑shifting terrain of U.S. mortgage rates.

Source: Fortune.com – “Current Mortgage Rates” (September 18 2025).