SFN Blog

Current Trends in Mortgage Rates Across the USA

Mortgage rates in the United States have gone through big changes over the past few years. During the COVID-19 pandemic, rates dropped to record lows. But since 2022, they’ve been climbing again. This shift has had a big impact on homebuyers, homeowners, and the real estate market as a whole.

As of August 2025, the average 30-year fixed mortgage rate in the U.S. was 6.84%, according to Freddie Mac. That’s a big jump from the 2.65% average in early 2021. The increase in rates is mostly due to inflation, interest rate hikes by the Federal Reserve, and overall economic uncertainty.

These higher rates are making it more expensive to buy or refinance a home. This has slowed down home sales, especially for first-time buyers. At the same time, some regions of the country are seeing rates change faster than others due to local housing demand and lender competition.

Let’s break down what’s happening with mortgage rates across the U.S., what’s causing these changes, and what it means for people looking to buy or refinance a home.

Snapshot of Current Mortgage Rates

As of early August 2025, here are the national average mortgage rates, based on data from Freddie Mac and Bankrate:

  • 30-year fixed mortgage: 6.84%
  • 15-year fixed mortgage: 6.14%
  • 5/1 adjustable-rate mortgage (ARM): 6.45%

These averages have been fairly stable over the past few months, but they’re still much higher than what buyers were used to just a few years ago.

Let’s compare that to August 2021, when the 30-year fixed rate was around 2.87%, and the 15-year fixed rate was just 2.15%. That means buyers now may pay hundreds of dollars more each month for the same loan amount.

Let’s take a loan calculator: A $300,000 loan at 3% interest costs around $1,265/month (principal & interest). At 7%, the same loan costs around $1,996/month, a jump of over $700 per month. Because of this, many buyers are either delaying their plans or looking for smaller, more affordable homes.

Regional Differences

Mortgage rates can vary slightly from state to state or even city to city. While national averages provide a general picture, local markets often tell a different story.

Here are a few examples (based on Zillow data from July 2025):

  • California: 30-year fixed around 7.02%
  • Texas: 30-year fixed around 6.78%
  • Florida: 30-year fixed around 6.92%
  • Ohio: 30-year fixed around 6.59%
  • New York: 30-year fixed around 6.95%

Why the differences?

Several factors affect local rates:

  • Housing demand
  • Lender competition
  • Regional economic strength
  • Credit trends in the area

For example, California often sees slightly higher rates due to higher home prices and stricter lending requirements. In contrast, states with slower housing markets may see lenders offer more competitive deals to attract buyers.

Key Economic Factors Influencing Rates

Mortgage rates don’t move randomly. They’re tied to what’s happening in the economy. Here are the main things pushing rates higher or lower:

1. Federal Reserve Interest Rates

The Fed doesn’t set mortgage rates directly. But when it raises its federal funds rate, borrowing becomes more expensive overall. Since early 2022, the Fed has raised rates several times to fight inflation. That has had a direct impact on mortgage rates.

2. Inflation

High inflation means the value of money goes down, so lenders raise rates to protect their returns. Even though inflation has cooled a bit in 2024 and 2025, it’s still higher than pre-pandemic levels.

3. Treasury Yields

Mortgage rates usually follow the 10-year Treasury yield. When the yield goes up, mortgage rates usually rise too. Investors’ confidence in the economy, government spending, and global events can all affect yields.

4. The Economy

Strong job growth, higher wages, and solid economic activity can push rates up. When the economy slows, rates may drop. It’s a balancing act; what helps the economy grow can also lead to higher borrowing costs.

Homebuyer Behavior and Market Response

Higher mortgage rates have changed how people buy homes. Here’s what’s happening:

Fewer People Are Buying

Many would-be buyers have hit pause. Some can’t afford monthly payments at today’s rates, while others are waiting to see if rates drop. According to the National Association of Realtors, home sales fell 15% in the past year.

More Adjustable-Rate Mortgages

To save money upfront, some buyers are turning to ARMs. These loans start with lower rates but can adjust after a few years, which can be risky if rates go even higher.

Smaller Loans, Smaller Homes

Buyers are choosing cheaper homes or offering less. The average loan size has dropped, and smaller homes are more in demand.

Less Refinancing

Refinancing activity has dropped more than 80% since 2021. That’s because few people want to trade their 3% loan for one that’s over 6%.

Expert Opinions and Forecasts

Experts don’t all agree on where rates will go, but here are some general ideas:

  • Freddie Mac expects rates to stay between 6.5% and 7.2% through the end of 2025.
  • Fannie Mae predicts slight drops if inflation continues to cool.
  • Goldman Sachs and other analysts believe we may not see 5% rates again until late 2026 or beyond.

Quote from Realtor.com Chief Economist Danielle Hale:

“Rates are unlikely to fall sharply, but we may see slow declines as the economy adjusts to higher costs and slower growth.”

Tips for Borrowers in the Current Rate Environment

If you’re thinking of buying or refinancing, here are some tips to make smart moves:

Improve Your Credit Score

A better score means better rates. Pay down debt, make payments on time, and avoid opening new accounts right before applying.

Compare Lenders

Rates can vary between banks, credit unions, and online lenders. Always shop around.

Consider Loan Types

A 30-year fixed loan is the most stable. But if you plan to move soon, a 5/1 ARM might save you money in the short term.

Look Into Rate Locks

Some lenders let you “lock in” a rate for 30 to 90 days. This protects you if rates go up before your loan closes.

Save a Bigger Down Payment

The more you put down, the less you borrow, and the better your terms.

Wrap Up

Mortgage rates are higher than they’ve been in over a decade. This makes it harder for many people to buy homes or refinance existing ones. Still, the market is adjusting. Home prices are stabilizing in some areas, and buyers are getting creative.

Whether you’re buying your first home, moving, or just watching the market, it’s important to understand what’s driving mortgage rates and how they affect your choices. Stay informed, stay flexible, and always compare your options.