Average mortgage rates have declined following the Federal Reserve’s decision on June 20, 2025, to maintain benchmark interest rates between 4.25% to 4.50%. This marks the fourth time since December 2024 that the Fed has held rates steady. Mortgage lenders closely monitor the Fed rate, which is influenced by economic factors that impact borrowing rates for significant loans, such as mortgages. Federal Reserve Chair Jerome Powell emphasized the need for price stability in the housing market and a robust labor market for sustainable growth.
As you consider buying a home during the peak spring season, it’s advisable to focus on your long-term housing requirements rather than short-term rate fluctuations. Start shopping for a mortgage early to assess affordability and compare quotes across various loan options. The current average rate for a 30-year fixed mortgage is 6.82% for purchase and 6.79% for refinancing, slightly lower than the previous week. Meanwhile, rates for a 15-year mortgage have also decreased.
Various factors, including inflation, economic conditions, housing market trends, and the Federal Reserve’s interest rate policies, determine mortgage rates. Lenders assess your credit score, down payment amount, property details, and loan terms when determining your mortgage rate. Given the daily rate fluctuations, it’s recommended to secure a mortgage rate when you are comfortable with the terms and conditions of the loan.
Freddie Mac’s recent weekly mortgage report shows a decline in average rates for both 30-year and 15-year fixed mortgages compared to the previous week. Chief economist Sam Khater suggests that lower rates, combined with increased housing inventory, may encourage prospective buyers to enter the market.
“Freddie Mac updates the Prime Mortgage Market Survey data weekly on Thursdays at noon ET. Four key factors impact your mortgage rate. Even a small difference in interest rate can save you money over time. Your final rate depends on the type of mortgage, upfront payments, and financial health.
1. Credit score: A good credit score, typically 670 or higher, can help you secure the best rates. Even with fair credit, you may find decent options.
2. Down payment: Putting down at least 20% can lower your rate and avoid mortgage insurance.
3. Loan term: Shorter terms usually have lower rates but higher monthly payments. Longer terms may have lower monthly payments but higher total interest.
4. Interest rate type: Choose between fixed-rate mortgages or adjustable-rate mortgages based on your financial goals.
Prequalification vs. preapproval: Prequalification gives a rough estimate of what you can borrow, while preapproval provides a more accurate figure after a detailed financial assessment.
Keep up with mortgage rates, influenced by the Federal Reserve’s benchmark rate and economic factors. As the Fed rate rises, mortgage rates tend to increase. Understanding these factors can help you make informed decisions during the homebuying process.”
During the pandemic, the Federal Reserve made a series of interest rate cuts that were eagerly anticipated. On September 18, the Fed announced a half-point reduction to its federal funds target interest rate, followed by two additional quarter-point cuts after its November and December meetings in 2025. These actions aimed to impact various aspects of personal finances, including savings, student loans, and mortgage rates.
However, on June 18, 2025, the Fed decided to pause rate cuts for the fourth consecutive time. After maintaining the interest rate at 4.25% to 4.50%, the Federal Reserve stated that it was focused on achieving “maximum employment” and keeping inflation at 2%. The Fed acknowledged the stable unemployment rate and solid labor market conditions but also noted remaining economic uncertainties.
Looking ahead to the Fed’s next policy meeting on July 29–30, 2025, it is uncertain whether there will be further rate cuts. Market expectations, as indicated by the CME FedWatch Tool, suggest a high probability that rates will remain unchanged. Economists are closely monitoring inflation and labor reports to anticipate the timing of future rate adjustments.
Recent data on job growth and inflation rates have influenced the Fed’s decisions. Despite some positive signs in the job market, inflation has been a concern, with prices showing a slight rise. Federal Reserve Chair Jerome Powell emphasized the gradual impact of tariffs on consumer goods and the need for a cautious approach in analyzing economic trends.
In regards to potential rate cuts, Powell mentioned, “We have not encountered a situation like this before, and I believe we should approach our forecasting abilities with humility.” The rate-setting panel led by Powell is scheduled to announce its decision at the end of the meeting on Wednesday, July 30, 2025, at 2 p.m. ET. For more information, you can find out about the upcoming Federal Reserve meeting and its implications on your finances.
Explore additional articles in our series on mortgages and home buying, including guides on how to search for a mortgage as a homebuyer in 2025, the different types of popular mortgage loans available, optimal times to refinance your mortgage, understanding mortgage rate locks, transitioning from an adjustable-rate mortgage to a fixed-rate mortgage, and answers to common inquiries about mortgage rates and how they can impact your budget and financial objectives. Don’t forget to check out our collection of personal finance resources tailored to help you save money, generate income, and build your wealth.
Curious about mortgage lenders? These are financial institutions that provide loans to individuals purchasing homes. Unlike loan servicers, whose responsibilities include managing loan operations like payment processing and communication with borrowers, lenders specialize in extending credit for home purchases.
Considering refinancing your mortgage? Refinancing involves replacing your existing mortgage with a new one from a different lender, offering improved terms and lower interest rates. Discover more about this process in our guide on when to refinance.
Wondering if you qualify for homebuyer assistance even if you’ve previously owned a home? While many programs are designed for first-time buyers, both the IRS and HUD may classify you as a first-time homebuyer if you or your spouse has not owned a principal residence in the past three years. Learn about available assistance programs in our comprehensive guide.
Interested in adjustable-rate mortgages (ARMs)? An ARM is a home loan with a fluctuating interest rate, unlike fixed-rate mortgages. ARMs typically start with a fixed rate for a specified period before switching to an adjustable rate for the remainder of the loan term. Find out more about converting your ARM to a fixed-rate mortgage in our refinancing guide.
Can you negotiate your mortgage rate? While negotiations may be limited as lenders consider market conditions and financial factors, you can inquire about alternative ways to reduce costs when comparing lenders. Some lenders offer lower rates through “mortgage points” – upfront fees paid to the lender. Each point, typically costing 1% of the mortgage amount, can lower your interest rate by around 0.25%, potentially saving you money in the long run.
Discover valuable information on lenders and loans in our mortgage guide. Have questions about what happens to your mortgage after you pass away? Find out how your home’s mortgage is handled and who may be responsible for it. Explore options for using your home’s equity to cover unexpected expenses or high-dollar costs without losing your current low-rate mortgage. Learn more about accessing your home’s equity and taking advantage of lower rates. Please note that rates may vary by region and are subject to change. Refer to reliable sources for up-to-date information on the mortgage industry, market surveys, and economic indicators.
