WASHINGTON– Mortgage rates reached a fresh 2025 low this week.
The average 30-year mortgage rate was 6.5%, according to Freddie Mac data, down from 6.56% a week earlier. The average 15-year rate was 5.6%, down from 5.69% last week.
As the CU Daily has reported, mortgage rates have hovered around 10-month lows in recent weeks, though there’s little evidence that lower rates have boosted homebuying. They have played a role in refinancing activity, however.
Mortgage applications to purchase a home dropped 3% compared with a week earlier, according to Mortgage Bankers Association data, while refinancing applications were up 1%.
‘Trickle, Not a Surge’
In a report released this week, brokerage Redfin said lower rates had sparked “a trickle, not a surge” of homebuying demand, likely because many buyers still struggle with affordability at today’s prices.
Rate-watchers are focused on today’s jobs report. Weaker-than-expected employment data could signal that the Federal Reserve needs to accelerate its rate-cutting plans to support the labor market, which would push down bond yields and, with them, mortgage rates.
“Continued signs of labor market weakness could likely reinforce the current downward trend in rates,” Kara Ng, a senior economist at Zillow, said in a statement. “Conversely, unexpectedly strong employment figures could quickly reverse recent gains.”
Greg McBride, chief financial analyst at Bankrate, told MarketWatch that the health of the U.S. economy will have the biggest impact on mortgage rates.
“If the labor market weakens further, we’ll see mortgage rates fall. If not, then stubborn inflation, rising debt and deficits will continue to keep a floor under mortgage rates,” McBride said.
‘Motivating Buyers’
McBride added that it would take significant movement in mortgage rates to really motivate buyers.
“Mortgage rates in the high 6’s have kept home sales at some of the lowest levels in 30 years, even during the traditionally busier summer months. Mortgage rates at present levels aren’t motivating homebuyers or sellers,” he told MarketWatch.
