Average Mortgage Rates Decrease to 6.56%, Staying at Lowest Point in 10 Months

Mortgage rates have seen a slight decrease to 6.56%, marking a 10-month low according to Freddie Mac’s latest information. Rates have been on a modest decline after reaching their peak in May 2025. This easing has contributed to a rise in existing-home sales for July, although new-home sales have been slow, and pending home sales show a lackluster performance for the same month.

Amid this landscape, buying power in the housing market has taken a hit compared to 2019 due to the persistent elevation of mortgage rates. The median-income family across the country now experiences a nearly $30,000 drop in their home purchasing ability this summer compared to two years ago. These challenges have made the season tough for those involved in the real estate market.

Looking towards the future, the expectation is for the Federal Reserve to implement a rate cut in September, subject to data on inflation and labor markets meeting the predicted values. This action should lead mortgage rates to continue their modest downward trajectory until at least mid-September. By cutting rates, the Fed aims to move away from its restrictive policy slightly, aligning more closely to neutral territory. This adjustment comes amidst slower job growth trends, with a vigil eye on inflation dynamics.

Following the rate cut, the direction and levels of mortgage rates will rely on incoming data. While the Fed’s influence on short-term rates impacts longer-term rates like mortgages, economic growth, labor market conditions, and inflation expectations play vital roles. If labor market data indicates further weakening or if inflation remains below projected levels, mortgage rates could continue to fall. The prevailing expectations for inflation are largely influenced by pricing adjustments due to tariffs. Thus, there might be less sensitivity in mortgage rates to higher inflation readings than seen previously.

Today’s data brings some relief for homebuyers, suggesting that similar conditions may continue over the next month or so. However, the future of mortgage rates remains uncertain and hinges on forthcoming data. Buyers prepared to make a move would be wise to leverage the current trends and take action proactively to benefit from the current market situation.