Mortgage Rates Near 10-Month Lows: Can They Drop More?

Mortgage Rates Remain Stable in August, Experts Predict

The average rate on a 30-year mortgage has held at a 10-month low, according to recent data, and is currently at levels seen in early October 2024. This stability offers some relief for homebuyers who have been navigating a challenging real estate market. However, the question remains: what can we expect from mortgage rates in the coming months?

Experts suggest that there won’t be much change in the near term. Most predict that rates will remain in the mid-to-high 6% range throughout August. Greg McBride, chief financial analyst at Bankrate, explains that a significant increase in inflation or a slowdown in economic growth would be needed to see any meaningful changes in mortgage rates. “Barring that, it will be more of the same, with 30-year fixed mortgage rates between 6.7% and 6.9% on average in August,” he says.

McBride also highlights that elevated mortgage rates are a result of rising debt in both the U.S. and other major economies. He notes that there isn’t a short-term fix for this situation and that these rates are likely to maintain a floor for several months.

Economic Factors Influencing Mortgage Rates

WalletHub analyst Chip Lupo echoes similar sentiments, stating that mortgage rates are expected to stay within the high 6% range in August. He adds that while the Federal Reserve is anticipated to cut rates later this year, concerns about inflation and uncertainty surrounding tariffs are putting pressure on how much mortgage rates can decrease. “Unless there’s an unexpected shift, we’re more likely to see a slow, modest decline rather than a significant drop anytime soon,” Lupo explains.

Michael Gaines, SVP of Capital Markets at Cardinal Financial, points to mixed economic signals, moderating inflation, a stable labor market, and the Federal Reserve's wait-and-see approach as factors keeping rates stable. “The biggest drivers [in August] will be inflationary readings such as the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE). These indicators and policy updates offer insight into how long the Fed may hold rates steady, and markets tend to move ahead of the Fed’s decisions,” he says.

Dr. Jessica Lautz, deputy chief economist at the National Association of Realtors (NAR), confirms that mortgage rates are forecast to remain relatively flat in the high 6% range. She emphasizes that mortgage interest rates play a crucial role in housing affordability for buyers and are also used by sellers as a benchmark for deciding whether to move.

Long-Term Outlook for Mortgage Rates

Looking beyond August, experts suggest that there may be some positive developments for home buyers and sellers in the second half of 2025. Kara Ng, senior economist at Zillow Home Loans, forecasts a gradual decline in rates throughout the rest of the year, with rates ending the year in the mid-6% range. Fannie Mae predicts rates will be around 6.40% by the end of 2025, while the Mortgage Bankers Association expects rates to be near 6.70% by the end of the year.

Should You Take Out a Mortgage Now?

Deciding whether to take out a mortgage in August depends on individual circumstances. Todd Luong of REMAX DFW Associates suggests that if someone is financially ready and has found a home that meets their needs, it makes sense to proceed with the purchase. “There’s no guarantee that waiting will lead to better affordability, especially since home prices are still rising in some areas. In my opinion, it’s better to focus on the long-term benefits of homeownership than to try to perfectly time the market,” he says.

Greg McBride notes that for the housing market to improve, there needs to be significant movement in mortgage rates. “Mortgage rates in the high 6s are keeping home sales at a subdued level, even during the traditionally busier summer months. Mortgage rates at present levels just aren’t motivating homebuyers or sellers,” he says.

Navigating the Current Market

Continuing high mortgage rates mean that unsold inventory of homes on the market will continue to grow across the country. Mike Simonsen of Compass states that the number of listings with price reductions is relatively high, and the time on market continues to increase. “These trends show no signs of reversal in August,” he adds.

For buyers, there are several options available to navigate the current real estate market. These include interest rate buydowns, adjustable-rate mortgages (ARMs), and government-backed programs such as FHA and VA loans. Additionally, improving credit scores and lowering debt-to-income ratios can significantly improve loan terms.

Holden Lewis, home and mortgage expert at NerdWallet, cautions against waiting for a significant drop in mortgage rates. “Waiting for a significant drop in mortgage rates might not be the money-saver that today’s thwarted buyers are looking for. It’s probably going to be a long time before mortgage rates fall below 6.5%. When rates do drop below 6.5%, buyers will flood the market and bid up prices,” he says.