Mortgage rate update for October 24, 2025: Rates are largely stable

Current mortgage rates data:

Coins2Day examined Optimal Blue’s most recent data on October 23rd, showing home loans secured up to October 22nd. 

What's the current situation with mortgage rates in the market?

For a considerable duration, it seemed as though 30-year mortgage rates were hovering just below the 7% mark, and indeed, they largely were. A common expectation was that rates would decline once the Federal Reserve began lowering the federal funds rate last year; however, mortgage rates did not experience a lasting reduction. According to Freddie Mac data, the average rate for a 30-year, fixed-rate mortgage exceeded 7% in January 2025, marking the first time this has occurred since last May. This represents a significant increase from the historically low average of 2.65% observed in January 2021.

Barring another significant crisis, specialists concur that mortgage rates won't return to the 2% to 3% bracket within our lifetimes. Furthermore, given the uncertain economic forecast as President Donald Trump implements policies like tariffs and deportations, certain commentators have expressed concern that the job market might tighten and inflation could reappear. In light of these circumstances, U.S. Home purchasers have for a long time contended with elevated mortgage rates—though some discovered methods to make their acquisition more feasible, such as arranging rate reductions with a developer when buying a new home.

Homebuyers and homeowners seeking to refinance experienced some welcome relief beginning in late August and early September of 2025. By that time, mortgage rates began a clear downward trend leading up to the Fed's September 16-17 gathering. At this meeting, the central bank revealed a much-awaited reduction in rates by a quarter of a percentage point. With two additional Fed meetings scheduled for the remainder of the year, further rate reductions remain a possibility.

Securing the most favorable mortgage rate available

Even though economic circumstances are outside of your influence, your financial standing as a borrower significantly affects the mortgage interest rate you receive. Considering this, strive to accomplish the following:

• Make sure you have excellent credit. The minimum credit score for a conventional mortgage is generally 620 (for FHA loans, you may qualify with a score of 580 or a score as low as 500 with a 10% down payment). However, if you’re hoping to get a low rate that could potentially save you five or even six figures in interest over the life of your loan, you’ll want a score considerably higher. For instance, lender Blue Water Mortgage notes that a score of 740 or higher is considered top tier in the context of home loan applications.
• Maintain a low debt-to-income (DTI) ratio. You can calculate your DTI by dividing your monthly debt payments by your gross monthly income, then multiplying by 100. For example, someone with a $3,000 monthly income and $750 in monthly debt payments has a 25% DTI. When applying for a mortgage, it’s typically best to have a DTI of 36% or below, though you may be approved with a DTI as high as 43%.
• Get prequalified with multiple lenders. It's a good idea to explore options from major banks, community credit unions, and digital lenders, then compare their proposals. Furthermore, speaking with loan officers at various institutions can assist you in determining your lender preferences and which entity is most suitable for your requirements. When comparing interest rates, make sure your evaluation is uniform; for instance, if one quote includes the purchase of mortgage discount points and another does not, it's crucial to understand that acquiring points to lower your rate involves an initial expenditure.

Historical chart of mortgage interest rates

A crucial piece of background for the conversation on elevated mortgage rates is that approximately 7% rates seem high due to the recent recollection of rates between 2% and 3%. Such low rates were achievable because of extraordinary government measures designed to avert a recession while the nation contended with a worldwide health crisis.

Experts concur that under more standard economic circumstances, we probably won't experience such remarkably low interest rates again. Rates around 7% are historically not considered exceptionally high.

Looking at a St. Louis Fed (FRED) chart that uses Freddie Mac data for the average 30-year, fixed-rate mortgage reveals that these rates were fairly typical from the 1970s to the 1990s, except for a notable surge in the early 1980s. Specifically, mortgage interest rates climbed above 18% during September, October, and November of 1981.

However, this historical viewpoint provides scant comfort to property owners who might wish to relocate but are constrained by an unprecedentedly low interest rate. These circumstances are prevalent enough in today's market that the low rates from the pandemic period, which prevent homeowners from moving when they otherwise might have, have come to be recognized as the “golden handcuffs.”

Elements influencing mortgage interest rates

Mortgage rates might be significantly influenced by the U.S. Economy. Lenders may increase rates to safeguard their future earnings if they anticipate inflation.

Furthermore, the national debt represents another crucial element. When the government must secure substantial loans to finance its expenditures, this can lead to an increase in interest rates.

The need for mortgages also matters. When fewer individuals seek loans, financial institutions may reduce interest rates to draw in customers. Conversely, if there's substantial demand for borrowing, they could increase rates to offset their expenses.

The Federal Reserve's actions also have an impact. By altering the federal funds rate and managing its balance sheet, the Fed can influence rates on mortgages and other financial products.

While the federal funds rate garners significant media focus and often influences mortgage rates when it shifts, it's important to recall that the Fed doesn't directly determine mortgage rates, nor do they consistently align perfectly with the fed funds rate.

The Fed also impacts rates significantly via its balance sheet. During difficult periods, it has the ability to purchase assets, such as mortgage-backed securities (MBS), to stimulate economic activity.

Lately, however, the Fed has been reducing its balance sheet, opting not to substitute assets when they reach maturity. This action typically leads to higher interest rates. Therefore, while attention is directed towards changes in the fed funds rate, the central bank's balance sheet management could have a greater impact on your mortgage rate.

The significance of comparing mortgage rates

To secure the most suitable mortgage, it's crucial to compare interest rates across various loan types and explore options from multiple financial institutions.

For those with superior credit, a traditional mortgage could be the perfect fit. Conversely, if your score falls under 600, an FHA loan might present an option unavailable with a conventional loan.

Investigating choices with various banks, credit unions, and online lenders can substantially impact your total expenses. Freddie Mac's findings suggest that during periods of elevated interest rates, prospective homeowners might reduce their yearly outlays by $600 to $1,200 by seeking quotes from several mortgage providers.