Mortgage rates fall to 10-month low

Published: Thursday, August 28, 2025 at 5:32 pm

Mortgage Rates Dip to 10-Month Low, But Affordability Remains a Challenge

Mortgage rates have edged downward, reaching a 10-month low, according to Freddie Mac's latest Primary Mortgage Market Survey released Thursday. The average rate on a 30-year fixed mortgage now stands at 6.56%, a slight decrease from the previous week's 6.58%. A year ago, the rate on a 30-year loan was significantly lower at 6.35%. The 15-year fixed mortgage rate remained unchanged at 5.69% compared to last week, though it was slightly higher than the 5.51% recorded a year ago.

This decrease in rates comes amidst ongoing affordability concerns in the housing market. A recent report from Realtor.com indicates that only 28% of homes on the market are currently affordable for the average American household. The maximum affordable home price for a median-income household has fallen to $298,000. This is a notable decrease from the $325,000 figure in 2019, despite a 15.7% increase in median income over the same period.

Sam Khater, Freddie Mac's chief economist, noted that "purchase demand continues to rise on the back of lower rates and solid economic growth." He added that lower rates "may provide them with the impetus to enter the market" for potential homebuyers facing affordability challenges.

Danielle Hale, Realtor.com's chief economist, attributes the affordability crisis to higher interest rates, which have eroded the purchasing power of the typical American household. This has led many buyers to adjust their expectations, potentially by seeking smaller homes, relocating to more affordable areas, or delaying their homeownership plans.

The annual State of the Nation's Housing report from the Joint Center for Housing Studies (JCHS) of Harvard University indicates that home prices and interest rates have risen so significantly that they have reduced homebuying to its lowest level since the mid-1990s.

BNN's Perspective: While the slight decrease in mortgage rates is a positive development, the underlying issue of housing affordability remains a significant concern. The current market dynamics present a complex challenge for potential homebuyers, and policymakers will need to consider strategies to address the affordability crisis.

Keywords: mortgage rates, housing market, affordability, 30-year fixed mortgage, 15-year fixed mortgage, home prices, buying power, Freddie Mac, Realtor.com, homeownership, interest rates, median income

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