2025 Average 30-Year Mortgage Rate Drops Below 7% at 6.95% – Freddie Mac Update

Diccon Hyatt is a seasoned financial and economics journalist, specializing in simplifying complex economic trends for everyday readers. Over the past two years, he has extensively covered pandemic-era economic shifts, shedding light on their impact on personal finances and markets. His previous work includes contributions to U.S. 1, Community News Service, and the Middletown Transcript.

Key Highlights

• The average 30-year mortgage rate has fallen to 6.95%, marking the first drop below 7% since August 2023, according to Freddie Mac.
• This downward trend offers relief to prospective homebuyers challenged by previously high borrowing costs.
• Cooling inflation and market anticipation of Federal Reserve rate cuts are primary drivers behind this decline.

Homebuyers are finally seeing mortgage rates dip under the 7% threshold, a level not reached since August 2023. Freddie Mac reports the average rate for a 30-year fixed mortgage decreased to 6.95% this week from 7.03% last week. This marks the seventh consecutive weekly decline, easing affordability pressures that peaked with rates near 8% in late October.

The recent drop is largely attributed to easing inflation trends, which have encouraged financial markets to anticipate that the Federal Reserve will lower its benchmark federal funds rate next year. Since July, the Fed has maintained rates at a 22-year high to curb inflation. However, recent signals from Fed officials indicate no further hikes are expected and that rate reductions may commence in 2024.

This shift could stimulate activity in the housing market, which has been sluggish due to the combination of high mortgage rates and elevated home prices, making homeownership challenging for many except high-income buyers or current homeowners looking to sell.

"With inflation slowing and the Federal Reserve's outlook pointing towards rate cuts in the coming year, we anticipate gradual improvements in housing market conditions," said Sam Khater, Freddie Mac's Chief Economist.

Freddie Mac calculates the 30-year mortgage average weekly, blending data from five prior days. Meanwhile, ZAMONA offers daily averages across 13 mortgage types, with today's 30-year fixed rate at 7.28%, the lowest since July 26, 2023.

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