Maybe. The Federal Reserve, whose decisions impact rates, will meet in October and a rate cut is at least possible and that could lead to somewhat lower mortgage rates.
The Fed actually doesn't directly set mortgage rates, but its decisions do affect the costs banks incur for borrowing. This impacts the rates the banks offer. If banks pay more to borrow money, they also charge more to lend it. In 2025, the Fed has had a cautious stance on rate cuts because of persistent inflationary pressure in the economy. In classic monetary policy, when there is inflation, the Fed doesn't like to cut rates. Lower rates could fuel inflation.
Mortgage rates closely track the yield on the 10-year Treasury notes. These are long-term, safe investments. Treasury yields have been elevated due to fears of inflation and uncertainty in the economy. This keeps mortgage rates high.
But other factors could lead to lower mortgage rates. Lenders in competitive housing markets may offer slightly lower rates to attract borrowers.
The key question for home buyers is really whether they are ready to take out a mortgage: Good credit scores, low debt-to-income ratios, and a house they can afford.
Rates today are not bad. Today's 6.78 percent to 7 percent rates (July 2025), are much lower than the 1970s when rates averaged 7.5 to 12.5 percent. The 1980s were much worse, topping out at a devastating 18.63 percent in 1981. In the 2000s, rates ranged from 5 to 6.5 percent before 2008.
It wasn't until 2020-2021 that we saw rates below 3 percent, and that was lower than 50 years of recorded data. Those rates were driven by aggressive monetary policy, low inflation, depressed demand, and other unusual factors.