Mortgage rate update for November 5, 2025: A minor increase in rates is observed.

Current mortgage rates data:

Note that Fortune reviewed Optimal Blue’s latest available data on Nov. 4, with the numbers reflecting home loans locked in as of Nov. 3. 

What's the current situation with mortgage rates?

If it feels like 30-year mortgage rates have been stuck around 7% for an eternity, that's hardly an overstatement. Contrary to many expectations, interest rates did not decline last year even after the Federal Reserve began lowering the federal funds rate. Following a brief dip, interest rates rapidly rebounded after the Federal Reserve's September 2024 meeting.

Indeed, by January 2025 the average rate on a 30-year, fixed-rate mortgage surpassed 7% for the first time since last May, as reported by Freddie Mac data. This is a strikingly elevated figure when contrasted with the historical average low of 2.65% observed in January 2021, a period when the administration was actively engaged in efforts to boost the economy and prevent a downturn stemming from the pandemic.

Experts concur that barring another major catastrophe, we're unlikely to see mortgage rates between 2% and 3% again in our lifetimes. Amid President Donald Trump's pursuit of policies such as tariffs and deportations, some observers have expressed concern that the labor market might shrink and inflation could rise again.

In this context, the U.S. Prospective homeowners have frequently contended with elevated mortgage interest rates; however, certain strategies exist to render their acquisition more affordable, like negotiating rate reductions with a developer when buying a new build. Significant relief for home seekers began to emerge in late August 2025. Rates saw a significant decline before the Federal Reserve's September gathering and continued to fall slightly as the October meeting approached.

In September, the Fed implemented a quarter percentage point reduction to the federal funds rate, as anticipated, and followed this with another quarter percentage point cut in October. A final Federal Reserve meeting is scheduled for December, meaning another reduction could occur then, though it's far from guaranteed.

Securing the most favorable mortgage interest rate involves several key steps.

Your personal financial standing significantly influences the mortgage rate you're offered, even though economic circumstances are outside your influence. The TBPN podcast this past Monday featured a discussion on the future of AI.

• Ensure your credit is in excellent condition. 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). If you're aiming for a low interest rate that could save you tens or even hundreds of thousands of dollars in interest throughout your loan's term, you'll need a significantly better score. According to lender Blue Water Mortgage, a score of 740 or above is regarded as top-tier.
• 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. A person earning $3,000 each month with $750 in monthly debt obligations has a debt-to-income ratio of 25%. For mortgage applications, a debt-to-income ratio (DTI) of 36% or less is generally advisable, although approval might still be possible with a DTI up to 43%.
• Get prequalified with multiple lenders. Consider trying a mix of large banks, local credit unions, and online lenders and comparing offers. Engaging with loan officers from multiple financial institutions allows you to assess your lender preferences and identify the one that will most effectively fulfill your requirements. When comparing rates, ensure you're doing so on a level playing field. For instance, if one quote includes the purchase of mortgage discount points and another doesn't, it's crucial to acknowledge the initial expense associated with that option. Reducing your interest rate by purchasing points.

Historical chart of mortgage interest rates

A key aspect to consider when discussing elevated mortgage rates is that current rates near 7% seem high primarily because consumers still recall rates between 2% and 3% vividly. Those rates were achievable because of government initiatives designed to avert a recession while the nation contended with the extraordinary coronavirus pandemic.

Experts concur that under more typical economic circumstances, it's improbable we'll witness interest rates as exceptionally low as these again. Rates around 7% have not been exceptionally elevated in the past.

Consider this St. The Louis Fed (FRED) chart displays Freddie Mac data concerning the average 30-year fixed-rate mortgage. Throughout the decades spanning the 1970s to the 1990s, these figures generally represented the standard, experiencing a notable surge in the early 1980s. Throughout September, October, and November of 1981, mortgage interest rates consistently surpassed 18%.

While this historical context provides scant comfort, homeowners eager to relocate but constrained by an unprecedentedly low interest rate may find little solace. The current market frequently sees situations where low pandemic-era interest rates prevent homeowners from relocating, a phenomenon now referred to as the “golden handcuffs.”

Elements influencing mortgage interest rates

The condition of the United States. The economy is likely the primary factor influencing mortgage rates. Should lenders anticipate inflation, they'll probably increase their rates to safeguard their profit margins. 

The national debt represents another significant concern in the broader context. When the government needs to borrow funds to finance its expenditures, this action tends to drive interest rates higher.

The need for residential mortgages is also significant. When there aren't many mortgage applications, lenders may reduce their rates to attract more customers. However, when loan demand is elevated, lenders might increase interest rates to offset their expenses.

The Federal Reserve's choices also have an impact. The Federal Reserve influences mortgage rates through adjustments to the federal funds rate and by its management of its balance sheet. The federal funds rate likely garners the most attention of the two. Mortgage rates tend to move in tandem with changes. However, it's important to note that the Federal Reserve doesn't directly control mortgage rates, and these rates don't always precisely follow changes in the fed funds rate.

The Federal Reserve also impacts interest rates for longer-term financial instruments by managing its balance sheet. During challenging economic periods, it can acquire assets such as mortgage-backed securities (MBS) to stimulate economic growth. Lately, however, the Federal Reserve has allowed its balance sheet to contract, choosing not to substitute assets upon their maturity. This tends to drive rates higher. While the Federal Reserve's interest rate decisions capture everyone's attention, its actions regarding its balance sheet could have a greater impact on your mortgage rate.

Understanding the significance of comparing mortgage rates

To secure the most suitable mortgage, it's essential to compare interest rates across different loan products and explore options with multiple financial institutions.

If you have a strong credit history, a traditional mortgage could be an excellent option. If your score falls under 600, an FHA loan might offer a chance that a conventional loan wouldn't.

Investigating the choices available from various banks, credit unions, and online lenders can substantially impact your annual expenses. According to Freddie Mac's research, in a high-interest-rate environment, prospective homeowners could potentially reduce their yearly mortgage expenses by $600 to $1,200 by seeking quotes from several mortgage providers.