Today's Mortgage Rates - 08/28/2025

Rates Edge Lower

Mortgage rates eked out a small decline this week, remaining at a 10-month low.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) fell by two basis points (0.02%), landing at 6.56%, as low as this average has been since the week of October 24, 2024.

Average offered rates for 15-year fixed-rate mortgages held steady this week at 5.69%. The current average matches the same 10-month low level as its longer-term counterpart.

An alternative to the 30-year fixed rate mortgage, the average offered rate for a 5-year hybrid ARMs eased a bit more than its fixed-rate counterparts. The Mortgage Bankers Association said that the initial fixed interest rate on a hybrid 5-year ARM decreased by seven basis points (0.07%) to 5.94%,

Currently, a 5/1 ARM might offer a homebuyer a lower-cost alternative to a long-term fixed-rate mortgage, although the difference in rate between 30-year FRMs and 5-year hybrid ARMs only widened modestly this week. With the change in rates, the gap in rate compared to a 30-year FRM is now 62 basis points (0.62%). Comparing this average rate against one for a 30-year FRM, a homebuyer with a $300,000 loan amount who selects the 5-year ARM would have a monthly payment that is $120.96 lower, will spend $9,328 less in interest cost and pay off an additional $2,071 in principal over the first five years of the loan compared to a 30-year fixed rate loan.

ARMs aren't for everybody, though. To help decide whether one might work for you, read HSH's Comprehensive Guide to Adjustable Rate Mortgages.

Mortgage rates settled to about 10 months lows in recent weeks based upon a disappointing labor report for July and significant downward revisions to hiring estimate for June and May. With expectations that the Fed would soon be trimming short-term interest rates on the rise, all eyes turned toward a a speech last Friday by Fed Chair Powell at an annual economics symposium. Last year, Mr. Powell's speech in Jackson Hole, WY laid the groundwork for a rate cut at the Fed's September meeting, and the FOMC voted to reduce the federal funds rate by a larger-than-normal half percentage point at that time. In the weeks between the speech and the FOMC meeting, 30-year mortgage rates declined about a quarter of a percentage point.

This year's speech did set expectations for a rate cut, but was considerably more cautious in setting those expectations. Mr. Powell noted that "risks to inflation are tilted to the upside, and risks to employment to the downside," and went on to say only that "the shifting balance of risks may warrant adjusting our policy stance," Revealing the Fed's thinking, he also said that "the stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance." This suggests that the Fed is likely prepared to cut rates by a quarter percentage point next month, but that investors shouldn't expect a string of repeats unless labor conditions suddenly worsen.

In response to his words, investor moods were buoyed, and stock markets rallied strongly. However, the bond market reaction was more muted, and there has been little follow-through in the modest improvement in bond yields this week. As such, we don't expect to see much movement in rates over the next few days. After that, a string of fresh labor-market data will dictate where they go from here.

Each week in HSH's MarketTrends newsletter, we track and discuss economic conditions that affect mortgage rates and their impact on housing markets and consumers. Read the most recent edition of MarketTrends or subscribe for email delivery.