Freddie Mac Mortgage Rates—Aug. 28, 2025
What happened to mortgage rates this week
The Freddie Mac 30-year fixed mortgage rate edged down 2 basis points, to 6.56%, notching another 10-month low. After peaking in May 2025, mortgage rates have generally pulled back, modestly and unevenly. This helped existing-home sales rise modestly in July, but new-home sales have remained sluggish and pending home sales were also lackluster in July.
Buying power has been sapped fairly broadly compared with 2019 as mortgage rates remain elevated. The median-income family nationwide saw a nearly $30,000 reduction in homebuying power this summer compared with 2019. This is one of several frustrations for participants in what’s been a cruel summer for the housing market.
What it means for the housing market
Looking ahead, Fed Chair Jerome Powell has set the stage for a Fed rate cut in September, assuming inflation and labor market data register as expected. This should help keep mortgage rates moving modestly lower at least until mid-September. A Fed rate cut will move today’s restrictive policy a touch closer to neutral, meaning that the Fed is easing off the monetary brakes in light of slower job growth data while still maintaining a watchful eye on inflation.
What happens after the Fed’s rate cut, however, will depend on the data. This is because while longer-term rates, like mortgage rates, are influenced by the short-end of the yield curve that the Fed adjusts, they are also affected by economic growth, labor market, and inflation expectations over the mid to longer term.
Mortgage rates will continue to decline if data suggests that the labor market is weakening further or if inflation is lower than expected. Expectations are quite high for inflation, which is likely to be variable as prices adjust to tariffs. For this reason, I don’t expect rates to be quite as sensitive to higher inflation readings as we’ve seen over the past few years. The Fed is still committed to a 2% inflation target, but is expecting at least a one-time reset in prices as tariffs pass through.
For homebuyers, today’s data offers a bit of relief, and we’re likely to see similar conditions in the next month or so, but with the outlook dependent on incoming data, it’s harder to say where mortgage rates might be in a few months. Shoppers who are ready would do well to take advantage of today’s trends.