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15 Housing Markets Facing the Steepest Decline in Home Prices

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Thinking about buying or selling a home? The housing market is always a hot topic, and right now, it's even more interesting. Several factors are at play, from mortgage rates to the availability of homes, and these are all impacting where prices are headed. According to the latest projections, while some markets are expected to remain stable or even increase in value, others are facing potential price declines. So, where are home values expected to drop the most?

Based on current forecasts, the 15 housing markets set for the biggest price decline over the next year are primarily concentrated in the South, with Mississippi and Texas leading the way. These markets could see significant drops in home values, presenting both challenges and opportunities for buyers and sellers. Let’s explore these markets and what the future might hold.

Why the Housing Market is Shifting

Before we get into the specific markets, it's important to understand the bigger picture. Several factors are contributing to the anticipated price declines in certain areas. The two key factors seem to be rising inventory and high-interest rates.

  • Rising Housing Inventory: More homes on the market mean more options for buyers, and that naturally puts downward pressure on prices. As sellers return to the market, they may need to lower their prices to attract buyers.
  • Elevated Mortgage Rates: High mortgage rates make buying a home more expensive. When borrowing money costs more, fewer people can afford to buy. This decreases demand, which can lead to price drops.
  • Labor Market Concerns: Uncertainty about jobs and the overall economy can also impact the housing market. If people are worried about losing their jobs, they're less likely to make big purchases like homes. This reduced confidence further cools the market.

Zillow's latest forecast predicts a 1.4% dip in home values this year, mainly due to the increase in available homes. This forecast is in line with what they projected last month, indicating a consistent trend. While sales are expected to rise by 1.9% compared to 2024, this increase isn't enough to offset the impact of higher inventory on prices.

15 Housing Markets Facing the Steepest Decline in Home Prices

Okay, let's break down the 15 metropolitan statistical areas (MSAs) predicted to see the biggest home price drops, according to the latest data from Zillow:

Region Name Region Type State Name Price Change (June 30, 2025) Price Change (August 31, 2025) Price Change (May 31, 2026)
Greenville, MS msa MS -2.6% -5.5% -15%
Pecos, TX msa TX -1.5% -3.8% -14.2%
Clarksdale, MS msa MS -3.1% -7.3% -13.6%
Cleveland, MS msa MS -2% -5.1% -13.4%
Bennettsville, SC msa SC -3% -6% -12.9%
Raymondville, TX msa TX -2.1% -4.9% -12.1%
Opelousas, LA msa LA -1.9% -4.6% -11.6%
Morgan City, LA msa LA -2.6% -5.7% -10.6%
Big Spring, TX msa TX -0.4% -2.2% -10.5%
Natchez, MS msa LA -2.6% -5.3% -10.3%
Zapata, TX msa TX -1.8% -3.5% -10.3%
Helena, AR msa AR -1% -2.1% -10.2%
Indianola, MS msa MS -2.6% -4.9% -10.1%
Johnstown, PA msa PA -1.6% -4.5% -10%
Hobbs, NM msa NM -0.5% -1.7% -10%

Let's take a closer look at each of these areas.

Deep Dive into the Declining Housing Markets

Here’s a closer look at what might be causing the downturn in these particular regions:

  1. Greenville, MS: Located in the Mississippi Delta, Greenville's economy is heavily reliant on agriculture. Fluctuations in commodity prices and agricultural yields can significantly impact the housing market. The projected 15% decline by May 2026 suggests deeper economic challenges in the area.
  2. Pecos, TX: Pecos has seen rapid growth due to the energy sector, particularly oil and gas. However, this growth is volatile and directly tied to commodity prices. A 14.2% decline indicates cooling in the energy sector may be impacting housing demand.
  3. Clarksdale, MS: Clarksdale, known as the “Home of the Blues,” faces similar economic challenges as other Mississippi Delta regions. A high poverty rate and limited job opportunities may be driving the projected 13.6% price decline.
  4. Cleveland, MS: Like its neighboring cities in Mississippi, Cleveland's economy is also challenged. Limited economic opportunities and slow population growth result in a predicted drop of 13.4%.
  5. Bennettsville, SC: Bennettsville is a smaller market facing economic headwinds related to declining manufacturing and limited diversification in employment opportunities that could be causing a 12.9% drop.
  6. Raymondville, TX: Located near the Texas-Mexico border, Raymondville's economy is tied to international trade and agriculture. Economic uncertainties related to trade policies and weather-related agriculture risks could explain the 12.1% decline.
  7. Opelousas, LA: Opelousas, a small city in Louisiana, faces challenges common to rural areas, including limited job growth and aging infrastructure. The 11.6% decrease reflects these underlying economic issues.
  8. Morgan City, LA: Reliant on the oil and gas industry, Morgan City faces volatility with energy market fluctuations. A 10.6% drop would suggest the oil market is softening here.
  9. Big Spring, TX: Another Texas city dependent on the energy industry, Big Spring's housing market is susceptible to the ups and downs of oil prices. The 10.5% decline may stem from reduced activity in the oil fields.
  10. Natchez, MS: Natchez, known for its historic homes and tourism, is still a smaller market in a state with broader economic challenges. A 10.3% decline may signify deeper problems than just high-interest rates.
  11. Zapata, TX: Zapata's proximity to the border makes it vulnerable to trade fluctuations and economic policies impacting cross-border activities. A 10.3% drop in housing could reflect these vulnerabilities.
  12. Helena, AR: Helena faces significant economic hardships, including high unemployment and poverty rates, which have had a profound effect on the value of the housing market leading to projected losses of 10.2%.
  13. Indianola, MS: Indianola, like other Mississippi Delta cities, struggles with limited economic diversification and a shrinking population. A 10.1% decline illustrates the broader economic struggles of the region.
  14. Johnstown, PA: Johnstown, located in southwestern Pennsylvania, has been grappling with a shrinking population and a shift away from its historical industrial base. With a projected dip of 10% there could be opportunities for new growth in other markets.
  15. Hobbs, NM: Hobbs, located in southeastern New Mexico, is part of the Permian Basin, a significant oil and gas production region. A 10% decline would imply that this is not a market where growth is expected in the near future.

What Does This Mean for You?

The potential price declines in these markets present both opportunities and risks, depending on your situation:

  • For Buyers: If you're looking to buy in these areas, you might be able to negotiate a better price or find more affordable options. However, be aware that these markets may face economic challenges. Do your research!
  • For Sellers: If you're selling, it's important to be realistic about pricing. You might need to lower your expectations and be prepared to wait longer to sell your home.
  • For Investors: These markets could offer investment opportunities if you're willing to take on the risk. Buying low and holding for the long term could pay off if these areas experience an economic turnaround. But thorough due diligence is crucial.

Final Thoughts

While these forecasts give us a glimpse into what might happen over the next year, the real estate market is complex and can change quickly. Various factors that go into prices of real estate change more frequently than any one can predict. Staying informed, doing your own research, and consulting with real estate professionals can help you to navigate these trends and make smart decisions!

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Housing Market Boom or Slump: NAR’s Report Shows Slight Drop in Sales

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Is the housing market about to crash or take off? That's the million-dollar question everyone's asking. The latest report from the National Association of Realtors (NAR) offers some clues, but the picture is, well, complicated. While existing-home sales decreased by 0.7% year-over-year, there's more to the story than just that one number. So, is it a housing market slump or boom in disguise? Let's dive into the details.

Housing Market Boom or Slump: NAR's Report Shows Slight Drop in Sales

Here's what the NAR report for May had to say:

  • Sales: Existing-home sales decreased by 0.7% compared to May of last year. However, month-over-month, sales actually ticked up by 0.8%, reaching a seasonally adjusted annual rate of 4.03 million.
  • Inventory: The number of homes for sale saw a significant increase, jumping 6.2% from April and a whopping 20.3% year-over-year, landing at 1.54 million units. This translates to a 4.6-month supply.
  • Prices: The median existing-home price rose by 1.3% compared to last year, hitting $422,800. That's a record high for the month of May and marks the 23rd consecutive month of year-over-year price increases.

Here's a Quick Summary:

Metric Change (Month-over-Month) Change (Year-over-Year)
Existing-Home Sales +0.8% -0.7%
Unsold Inventory +6.2% +20.3%
Median Sales Price +1.3%

Decoding the Numbers: What Does It All Mean?

At first glance, the 0.7% sales drop might sound alarming. But before you panic, remember that real estate is hyper-local. And more than that, context is everything.

First, the month-over-month increase suggests that demand might be picking up slightly. I have personally observed that while this is happening, people are very cautious owing to high interest rates. The increase in inventory is also a positive sign, offering buyers more choices and potentially easing the pressure on prices.

However, the elephant in the room is mortgage rates. As NAR Chief Economist Lawrence Yun pointed out, “The relatively subdued sales are largely due to persistently high mortgage rates.” He further notes that lower rates are pivotal to unlocking greater participation in the housing market.

The Regional Breakdown: Where Are the Hot Spots (and Not-So-Hot Spots)?

The NAR report also breaks down the data by region, revealing significant differences across the country:

  • Northeast: Both sales and prices are up, showing strength in this region.
  • Midwest: Similar to the Northeast, the Midwest is seeing positive growth in both categories.
  • South: Sales are down slightly year-over-year, but prices are also down a bit in this region. This could indicate a more balanced market.
  • West: The West is experiencing declines in sales, but prices are still inching upward. This could mean affordability is a major concern in this region.

Here's a quick summary of the regional performance:

Region Sales (Month-over-Month) Sales (Year-over-Year) Median Price (Year-over-Year)
Northeast +4.2% +4.2% +7.1%
Midwest +2.1% +1.0% +3.4%
South +1.7% -0.5% -0.7%
West -5.4% -6.7% +0.5%

It's important to note these regional differences when analyzing the overall market picture. What's happening in California is vastly different from what's happening in Ohio, and national averages can sometimes be misleading.

Mortgage Rates: The Key to Unlocking the Market

As mentioned earlier, mortgage rates are a crucial factor in the housing market. The NAR report indicates that the average 30-year fixed-rate mortgage was at 6.81% as of June 18th. While slightly down from the previous week and year, these rates are still high enough to deter many potential buyers.

Why are rates so important? Well, consider this simple example:

Imagine you're looking at a $400,000 home. At a 3% interest rate, your monthly mortgage payment (excluding property taxes and insurance) would be around $1,686. At a 7% interest rate, that payment jumps to about $2,661. That's a difference of nearly $1,000 per month!

It's no wonder that high mortgage rates are keeping some buyers on the sidelines.

First-Time Homebuyers, Investors, and Cash Sales

The NAR report also provides insights into who's buying homes:

  • First-time homebuyers: They made up 30% of sales, down from 34% in April and 31% in May 2024. This suggests that affordability challenges are particularly affecting first-time buyers. I have witnessed many potential first-time home buyers take a temporary step back in the last few months.
  • Individual investors/second-home buyers: This group accounted for 17% of transactions, up from 15% in April and 16% in May 2024. It would seem some investors are sniffing for opportunities in the current market.
  • Cash sales: Cash purchases represented 27% of transactions, up from 25% in April but down from 28% in May 2024. Cash buyers are less sensitive to mortgage rate fluctuations, which gives them an advantage in a high-rate environment.

Distressed Sales: Distressed sales (foreclosures and short sales) remained low, accounting for only 3% of total sales.

My Personal Take: Navigating an Uncertain Market- A Boom? A Bust? Neither perhaps!

So, what's my take on all of this? Honestly, I don't think we're heading for a major crash or a massive boom. Instead, I believe we're in a period of market correction and recalibration.

The increase in inventory is a good sign, helping to bring some balance back to the market. However, until mortgage rates come down significantly, I expect sales to remain somewhat subdued.

For buyers, this means you might have more leverage and negotiating power than you did a year or two ago. Take your time, shop around, and don't feel pressured to overpay.

For sellers, it means you need to be realistic about pricing. Gone are the days of simply listing your home and watching the offers pour in. Today's buyers are more discerning and price-sensitive.

Key Takeaways: Tips for Buyers and Sellers

Here's some quick advice for both buyers and sellers navigating the current market:

For Buyers:

  • Get pre-approved: Know your budget and what you can realistically afford.
  • Shop around for mortgage rates: Don't just go with the first lender you find
  • Be patient: The right home will come along.
  • Don't be afraid to negotiate: You may have more leverage than you think.

For Sellers:

  • Price your home competitively: Research comparable sales in your area.
  • Make necessary repairs and improvements: Ensure your home is in top condition.
  • Be prepared to negotiate: Be open to offers and willing to compromise.
  • Work with an experienced real estate agent: A good agent can guide you through the process and help you achieve your goals.

The Bottom Line: Patience and Perspective

The housing market is a complex and ever-changing beast. The latest NAR report provides valuable data, but it's important to interpret that data with caution and consider the broader economic context.

Whether you're a buyer, a seller, or simply someone interested in the market, remember to stay informed, do your research, and consult with professionals. And most importantly, have patience!

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Los Angeles Housing Market Cools as Buyers Pullback in 2025

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Is now the right time to buy or sell in Los Angeles? As of May 2025, the Los Angeles housing market is showing signs of cooling off, with sales and prices experiencing slight pullbacks. However, it's not all doom and gloom, and there are opportunities for both buyers and sellers if you understand the current dynamics. While the market is down 7.9% YOY, the median listing price of homes in Los Angeles, CA was $975K in May 2025, trending up 2.6% year-over-year.

I've been watching the Southern California housing scene for years, and what I'm seeing now is a shift from the frenzy of the past few years to something a bit more… normal. Let’s dig into the details so you can make the best decision for yourself.

Los Angeles Housing Market Cools as Buyers Pullback

The Big Picture: California's Sputtering Market

First, let's zoom out and look at the broader California context. According to the California Association of Realtors (C.A.R.), the state's housing market is facing some headwinds. In May 2025, existing single-family home sales totaled 254,190 on a seasonally adjusted annualized rate. That's down 5.1% from April and 4% from May 2024. The statewide median home price also dipped to $900,170, a 1.1% decrease from April and a 0.9% decrease from May 2024.

Several factors are contributing to this slowdown:

  • Lingering Economic Uncertainty: People are still cautious about the economy.
  • Elevated Mortgage Interest Rates: Although interest rates have averaged around 6.82% in May 2025 down from 7.06% in May 2024, concerns about the economy still linger and prevent people from considering taking loans.
  • Insurance Availability/Affordability: This is a big one, especially in areas prone to wildfires. The high cost (or lack) of home insurance can scare buyers away.

Los Angeles: A Closer Look

Now, let's focus on what’s happening right here in Los Angeles County and the broader metro area. The data reveals a mixed bag:

  • Median Home Price: In May 2025, the median price of an existing single-family home in Los Angeles County was $835,480. This is a decrease of 1.7% from $850,270 in April 2025, but an increase of 2.9% compared to $811,610 in May 2024.
  • Los Angeles Metro Area The median price of an existing single-family home was $855,000 This is a increase of 0.6% from $850,000 in April 2025, and increase of 1.8% compared to $840,000 in May 2024.
  • Sales: Home sales in Los Angeles County decreased by 7.9% compared to May 2024.
  • Unsold Inventory Index (UII): The UII for Los Angeles County was 3.9 months in May 2025, up from 2.7 months in May 2024. This means it would take longer to sell all the homes currently on the market.
  • Days on Market: The median time it took to sell a home in Los Angeles County was 23 days in May 2025, up from 18.5 days in May 2024.

So, what does all this mean? Quite simply, it's taking longer to sell homes, and while prices are still up year-over-year, they've softened a bit compared to the previous month. LA appears to be aligning to the broader direction of the wider Californian market.

Why the Slowdown? My Take

I think several factors are at play here in Los Angeles:

  1. Affordability Crisis: Let's face it, Los Angeles is expensive. Even with slightly lower prices, many people are priced out of the market. The large home prices are not the only factor impacting affordability; insurance rates and property taxes greatly restrict opportunity to get into the market.
  2. The “Wait and See” Approach: Some potential buyers are waiting to see if prices will drop further.
  3. More Inventory: As the data shows, there are more homes on the market compared to last year. This gives buyers more options and reduces the sense of urgency.
  4. Mortgage Rates: Even with rates dipping slightly from the previous year, they are still historically higher than what we have been used to over the past decade.
  5. Concerns About Economic Outlook: Broader uncertainty around economic outlook can prevent people considering loans.

Opportunities for Buyers

If you're a buyer, this might be a good time to get into the game. Here's why:

  • Less Competition: Bidding wars are less common than they were a year or two ago.
  • More Negotiating Power: You can often negotiate a better price or ask for concessions (like repairs or closing cost assistance). President of C.A.R., Heather Ozur, feels “With home prices leveling off and more homes coming onto the market, it’s a great time for well-qualified buyers to enter the market“.
  • More Choices: With increased inventory, you have a wider selection of homes to choose from.

However, don't expect fire-sale prices. Los Angeles is still a desirable place to live, and prices aren't likely to plummet dramatically.

Advice for Sellers

If you're selling, you need to be realistic about the market. Here are my suggestions:

  • Price it Right: Don't overprice your home. Look at what comparable homes have actually sold for recently, not just what they're listed for.
  • Make it Appealing: Invest in some basic repairs and improvements to make your home stand out. Cleaning, decluttering, and fresh paint can go a long way.
  • Be Patient: It might take longer to sell your home than it would have a year ago.

The Future: Crystal Ball Gazing

What's next for the Los Angeles housing market? That's the million-dollar question!

C.A.R.'s Senior Vice President and Chief Economist Jordan Levine feels “Although the market has slowed in recent months, there’s potential for a rebound if economic concerns subside, buyers may take advantage of improved conditions, including deeper price reductions and increased housing inventory.”

Here's what I'm watching:

  • Interest Rates: Mortgage rates will continue to play a big role. If they drop significantly, we could see a surge in buyer demand.
  • The Economy: A strong economy generally supports a healthy housing market.
  • Inventory: If inventory continues to rise, prices could soften further.

Key Takeaways

Here's a summary of where the market is:

  • The Los Angeles housing market is showing signs of cooling.
  • Sales are down year-over-year.
  • Prices are up year-over-year, but softening.
  • Inventory is increasing.
  • It's taking longer to sell homes.

No matter what the data says, every real estate transaction is personal. It has unique goals, circumstances and limitations.

I think the Los Angeles Housing market is a complex and dynamic story. Whether you're buying or selling (or just curious), do your research. Talk to local real estate agents. And most importantly, make informed decisions that are right for your individual situation.

Today’s Mortgage Rates – June 24, 2025: Rates Dip With 30-Year FRM Down to 6.85%

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As of today, June 24, 2025, the national average for 30-year fixed mortgage rates has dropped to 6.85%, which is a slight decrease from the previous week, making mortgages a bit more affordable. Notably, the 15-year fixed mortgage rate has also decreased to 5.88%. If you are considering buying a home or refinancing, these current rates present a potentially advantageous opportunity.

Today's Mortgage Rates – June 24, 2025: Rates Dip With 30-Year FRM Down to 6.85%

Key Takeaways:

  • 30-Year Fixed Mortgage Rate: 6.85% (dropped from 6.86%)
  • 15-Year Fixed Mortgage Rate: 5.88% (dropped from 5.91%)
  • Average 30-Year Refinance Rate: 7.13% (up from 7.11%)
  • Expectations: Future rates may stabilize around 6.4% to 6.6% through 2025.
  • Impact on Affordability: Lower rates can contribute to a decrease in monthly payments for new loans.

Current Mortgage Rates Overview

According to data from Zillow, today’s mortgage rates have shown marginal fluctuations. Here's a table summarizing the mortgage rates by loan type as of June 24, 2025:

Loan Type Current Rate 1-Week Change APR 1-Week Change
30-Year Fixed Rate 6.85% -0.06% 7.32% -0.06%
15-Year Fixed Rate 5.88% -0.08% 6.19% -0.08%
20-Year Fixed Rate 6.51% -0.07% 7.01% +0.06%
10-Year Fixed Rate 5.85% -0.08% 6.04% -0.03%
5-Year ARM 7.10% -0.10% 7.78% -0.02%
30-Year FHA Loan 7.75% +0.43% 8.79% +0.43%

The 30-year fixed rate mortgage remains a favorite for many homebuyers due to its stability and predictability over three decades. Given the lower current rates, buyers might want to consider locking in a rate while they can.

Today's Refinance Rates

For those looking to refinance, the national average 30-year fixed refinance rate is currently at 7.13%, which has shown a slight uptick from 7.11% last week. This is a critical factor for homeowners considering refinancing to reduce their monthly payments or consolidate debt. Below is a table of current refinance rates:

Refinance Loan Type Current Rate 1-Week Change APR 1-Week Change
30-Year Fixed Rate 7.13% +0.02% 7.32% -0.06%
15-Year Fixed Rate 5.96% -0.01% 6.19% -0.08%
20-Year Fixed Rate 6.51% -0.07% 7.01% +0.06%
5-Year ARM 7.12% +0.46% 7.78% -0.02%

With these refinance rates, homeowners are encouraged to evaluate their current mortgage plan.

Monthly Payment Calculations Based on Today's Rates

Calculating monthly payments based on current mortgage rates can help potential buyers and current homeowners understand their financial commitments. Below are mortgage payment estimates for various loan amounts under current rates.

Monthly Payment on $150,000 Mortgage

For a 30-year fixed mortgage rate of 6.85%, the estimated monthly payment would be approximately $996 for the principal and interest. This payment excludes property taxes and insurance, which can vary by location.

Monthly Payment on $200,000 Mortgage

If you take a $200,000 loan at the same rate of 6.85%, your monthly payment would be around $1,328. Again, this figure will vary slightly with taxes and insurance, but it serves as a solid baseline for budgeting.

Monthly Payment on $300,000 Mortgage

For buyers looking to purchase a home around $300,000, with the same 30-year fixed rate, the estimated monthly payment would be about $1,992. This highlights how even a slight increase in the mortgage amount can significantly impact monthly payments.

Monthly Payment on $400,000 Mortgage

Using the same mortgage rate of 6.85%, a $400,000 mortgage would result in a payment just over $2,657 monthly. This underscores the importance of knowing how rates and amounts affect overall budgeting.

Monthly Payment on $500,000 Mortgage

Lastly, a $500,000 mortgage under the same 30-year fixed rates would lead to a monthly payment of approximately $3,321. As the mortgage amount increases, so does the payment, which is crucial for buyers to assess before committing to a loan.

Future Mortgage Rate Predictions and Trends

From the latest forecasts, experts suggest that mortgage rates could stabilize around 6.4% to 6.6% through the remainder of 2025. The Mortgage Bankers Association anticipates rates will remain relatively unchanged until late summer, with economic conditions affecting the mortgage landscape as we progress into 2026. If inflation continues to be a concern, it may hinder a more significant decrease in rates.

The Fannie Mae Forecast outlines projections for mortgage rates dropping slightly to 6.5% by the end of 2025 and further down to 6.1% in 2026. This trend could lead to more favorable purchasing conditions for homebuyers looking for affordability.

Furthermore, projections from the Morgan Stanley strategists indicate that depending on economic shifts, there’s potential for mortgage rates to decrease in alignment with Treasury yields. If rates fall, like the change noted from 7% to 6.25%, that difference could lead to substantial savings in monthly payments.

For homebuyers and homeowners looking to make informed decisions based on today's mortgage rates, staying updated on these figures can be crucial. Understanding how mortgage rates affect monthly payments and future expectations allows for better financial planning and decision-making.

Invest Smarter in a High-Rate Environment

With mortgage rates remaining elevated this year, it's more important than ever to focus on cash-flowing investment properties in strong rental markets.

Norada helps investors like you identify turnkey real estate deals that deliver predictable returns—even when borrowing costs are high.

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Mortgage Refinance Rates Today Drop by 6 Bps – June 23, 2025

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If you've been watching mortgage rates closely, you'll be glad to hear that mortgage refinance rates today, June 23, 2025, have decreased by 6 basis points. The average 30-year fixed refinance rate has dropped to 7.11%, according to Zillow, offering a potential opportunity for homeowners to save money. But before you jump in, let's delve deeper into what this means for you and whether refinancing is the right move.

Refinance Rates Dip! Mortgage Refinance Rates Today (June 23, 2025) Fall 6 Bps

Understanding the Refinance Rate Dip

A drop of 6 basis points might seem small, but it can make a difference over the life of a loan. To put it in perspective, consider this:

  • The Numbers: The national average for a 30-year fixed refinance loan now sits at 7.11%, a decrease from 7.17% recorded previously.
  • The Trend: Compared to last week, the 30-year fixed refinance rate is down 5 basis points from an average of 7.16%.
  • Other Loan Types: The 15-year fixed refinance rate has also decreased by 6 basis points, now averaging 5.96%. Meanwhile, the 5-year ARM (Adjustable-Rate Mortgage) refinance rate remains steady at 6.46%.

Why Refinance?

Refinancing your mortgage involves taking out a new loan to replace your existing one. People usually do this for a few key reasons:

  • Lower Interest Rate: The most common reason. Securing a lower rate can significantly reduce your monthly payments and the total amount you pay over the life of the loan.
  • Shorten Loan Term: Switching from a 30-year to a 15-year mortgage can save you a ton of money on interest, even if the interest rate is slightly higher. You'll build equity faster, too!
  • Change Loan Type: Converting from an ARM to a fixed-rate mortgage provides stability and predictability in your monthly payments.
  • Consolidate Debt: You can roll other debts, like credit card balances, into your mortgage, potentially securing a lower interest rate and simplifying your finances.
  • Cash-Out Refinance: Access equity in your home for renovations, education, or other major expenses.

Current Refinance Rate Overview

Here's a quick look at the current refinance rates for different loan types, as of June 23, 2025:

Conforming Loans

PROGRAM RATE 1W CHANGE APR 1W CHANGE
30-Year Fixed Rate 6.88% down 0.04% 7.31% down 0.06%
20-Year Fixed Rate 6.37% down 0.21% 6.80% down 0.16%
15-Year Fixed Rate 5.91% down 0.05% 6.19% down 0.07%
10-Year Fixed Rate 5.85% down 0.08% 6.04% down 0.03%
7-year ARM 7.50% up 0.07% 7.73% down 0.09%
5-year ARM 7.08% down 0.12% 7.72% down 0.07%
3-year ARM — 0.00% — 0.00%

Government Loans

PROGRAM RATE 1W CHANGE APR 1W CHANGE
30-Year Fixed Rate FHA 7.75% up 0.95% 8.78% up 0.95%
30-Year Fixed Rate VA 6.62% up 0.01% 6.63% down 0.20%
15-Year Fixed Rate FHA 6.37% up 0.44% 7.34% up 0.45%
15-Year Fixed Rate VA 5.97% down 0.07% 6.33% down 0.06%

Jumbo Loans

PROGRAM RATE 1W CHANGE APR 1W CHANGE
30-Year Fixed Rate Jumbo 7.42% up 0.05% 7.72% up 0.03%
15-Year Fixed Rate Jumbo 6.88% up 0.11% 6.98% up 0.02%
7-year ARM Jumbo — 0.00% — 0.00%
5-year ARM Jumbo 9.00% up 0.01% 8.82% up 0.05%
3-year ARM Jumbo — 0.00% — 0.00%

Important Considerations Before Refinancing

Even with these slightly lower rates, it's wise to proceed with caution, think about whether refinancing makes sense for you:

  • Your Credit Score: A good to excellent credit score is crucial for securing the best refinance rates.
  • Closing Costs: Refinancing comes with closing costs, which can include appraisal fees, title insurance, and origination fees, consider this cost as well.
  • Break-Even Point: Calculate how long it will take to recoup the closing costs through your monthly savings. If you plan to move soon, refinancing might not be worth it.
  • Long-Term Financial Goals: Consider how refinancing aligns with your overall financial strategy.
  • Loan type : Choose the right loan option. A fixed-rate mortgage offers stability whereas ARM, which offers lower initial rates, but these rates can change over time.

How to Get the Best Refinance Rate

  • Shop Around: Don't settle for the first rate you're offered. Get quotes from multiple lenders to compare rates and fees.
  • Improve Your Credit Score: Pay down debts and correct any errors on your credit report.
  • Negotiate: Don't be afraid to negotiate with lenders, especially if you have a strong credit history and a good relationship with them.
  • Consider a Shorter Term: If you can afford the higher monthly payments, a 15-year mortgage can save you a lot of money on interest.

The Role of the Economy

Mortgage rates are intricately linked to the overall economic climate, influenced by factors like:

  • Inflation: High inflation often leads to higher interest rates as the Federal Reserve tries to cool down the economy.
  • Economic Growth: A strong economy can also push rates higher as demand for borrowing increases.
  • Federal Reserve Policy: The Fed's decisions on interest rates have a direct impact on mortgage rates.
  • Global Events: Unexpected global events can create economic uncertainty, leading to fluctuations in mortgage rates.

My Thoughts and Expertise

As someone who's followed the mortgage market for years, I can tell you that timing is everything. While a 6-basis-point drop is encouraging, it's essential to look at the bigger picture. Consider where you are in your current mortgage term and how long you plan to stay in your home. Also, pay close attention to economic indicators and forecasts, as they can provide clues about where rates are headed.

Final Thoughts

The decrease in mortgage refinance rates today offers a potential opportunity for homeowners to save money. Evaluate your personal finances, compare offers from multiple lenders, and factor in the long-term implications before making a final call. Don't rush into it. Consult with a financial advisor to ensure refinancing is a smart financial move is always a good idea.

Maximize Your Mortgage Decisions in 2025

Thinking about whether to refinance now? Timing is critical, and having the right strategy can save you thousands over the life of your loan.

Norada's team can guide you through current market dynamics and help you position your investments wisely—whether you're looking to reduce rates, pull out equity, or expand your portfolio.

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Today’s 5-Year Adjustable Rate Mortgage Rises Back – June 23, 2025

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Worried about rising interest rates? You're not alone. As of today, June 23, 2025, the national average 5-year Adjustable Rate Mortgage (ARM) has risen to 7.08%. This increase, while seemingly small, can have a significant impact on your home buying or refinancing plans. Let's unpack what's happening with mortgage rates right now and how it might affect you.

Today's 5-Year Adjustable Rate Mortgage Rises Back – June 23, 2025

Think of a mortgage as a marathon, not a sprint. Even a slight change in the interest rate can significantly impact how much you pay month to month and overall in the long run for your home. A seemingly small decimal point difference can add up to thousands of dollars over the life of a 30-year mortgage. This is why keeping an eye on these fluctuations is incredibly important, even if you're not actively looking to buy or refinance right now.

What's Happening with Mortgage Rates Today?

Let's dive into the specifics as of today, June 23, 2025, derived from Zillow's latest data:

  • 30-Year Fixed Mortgage Rate: Averaging 6.88%, down 2 basis points from 6.90% prior day & down 3 basis points from previous week
  • 15-Year Fixed Mortgage Rate: Currently at 5.91%, decreased 1 basis point from 5.92% prior day & down 5 basis points from previous week
  • 5-Year ARM: Sitting at 7.08%, up 3 basis points from 7.05% prior day & down 12 basis points from previous week

Here's a more detailed breakdown:

Conforming Loans

PROGRAM RATE 1W CHANGE APR 1W CHANGE
30-Year Fixed Rate 6.88% down 0.04% 7.31% down 0.06%
20-Year Fixed Rate 6.37% down 0.21% 6.80% down 0.16%
15-Year Fixed Rate 5.91% down 0.05% 6.19% down 0.07%
10-Year Fixed Rate 5.85% down 0.08% 6.04% down 0.03%
7-Year ARM 7.50% up 0.07% 7.73% down 0.09%
5-Year ARM 7.08% down 0.12% 7.72% down 0.07%
3-Year ARM — 0.00% — 0.00%

Government Loans

PROGRAM RATE 1W CHANGE APR 1W CHANGE
30-Year Fixed Rate FHA 7.35% up 0.02% 8.38% up 0.02%
30-Year Fixed Rate VA 6.43% up 0.02% 6.66% up 0.05%
15-Year Fixed Rate FHA 6.11% up 0.51% 7.08% up 0.51%
15-Year Fixed Rate VA 5.98% up 0.06% 6.34% up 0.10%

Jumbo Loans

PROGRAM RATE 1W CHANGE APR 1W CHANGE
30-Year Fixed Rate Jumbo 7.41% up 0.14% 7.88% up 0.20%
15-Year Fixed Rate Jumbo 6.55% down 0.04% 6.86% up 0.01%
7-Year ARM Jumbo 7.53% 0.00% 8.06% 0.00%
5-Year ARM Jumbo 7.53% down 0.18% 7.97% down 0.12%
3-Year ARM Jumbo — 0.00% — 0.00%

What is an Adjustable Rate Mortgage (ARM)?

An ARM is a type of mortgage where the interest rate is fixed for an initial period, and then it adjusts periodically based on a benchmark interest rate. In the case of a 5-year ARM, the rate is fixed for the first five years, after which it can adjust annually.

The Pros and Cons of an ARM:

  • Pros:
    • Lower Initial Interest Rate: ARMs often start with a lower interest rate than fixed-rate mortgages, potentially saving you money in the first few years.
    • Good for Short-Term Homeownership: If you plan to move before the fixed-rate period ends, an ARM can be a cost-effective option.
    • Potential for Rate Decreases: If interest rates fall during the adjustable period, your mortgage payments could decrease.
  • Cons:
    • Interest Rate Risk: The biggest risk is that interest rates could rise significantly after the fixed-rate period, leading to higher monthly payments.
    • Complexity: ARMs can be more complex than fixed-rate mortgages, making them harder to understand.
    • Payment Shock: If rates rise sharply after the fixed period, you could experience “payment shock,” where your monthly payments become unaffordable.

Why is the 5-Year ARM Rate Rising?

Several factors influence mortgage rates, and it's rarely one single event that causes them to fluctuate. Here are some of the primary drivers:

  • The Federal Reserve (The Fed): The Fed's monetary policy decisions, particularly changes to the federal funds rate, have a direct impact on borrowing costs. If the Fed raises rates to combat inflation, mortgage rates typically follow suit.
  • Inflation: Inflation erodes the value of money. Lenders demand higher interest rates to compensate for the expected loss of purchasing power over the life of the loan.
  • The Economy: A strong economy often leads to higher interest rates as demand for borrowing increases. Conversely, a weak economy can lead to lower rates as the Fed tries to stimulate growth.
  • Global Events: Unexpected global events, such as geopolitical instability or economic crises, can create uncertainty in the market and influence interest rates.
  • Investor Confidence: Mortgage rates are also influenced by how investors feel. If investors are confident in the market, rates may remain stable; however, if investors are unsure, rates may rise.

How Does This Affect Homebuyers and Homeowners?

For those looking to buy a home or refinance, here’s what you need to consider:

  • For Homebuyers:
    • Affordability Check: Rising rates mean reduced affordability. Reassess your budget and how much you can comfortably afford each month.
    • Consider a Lock: If you find a rate you like, consider locking it in to protect yourself from further increases prior to closing.
    • Explore All Options: Don't just look at one type of mortgage. Consider fixed-rate options, different ARM terms, and government-backed loans to find the best fit.
  • For Homeowners:
    • If You Have an ARM: Be prepared for potential rate adjustments. Review your loan terms and understand how often your rate can change and what the maximum rate is.
    • Refinance Evaluation: If rates are still lower than your current ARM rate, consider refinancing to a fixed-rate mortgage for stability. I always tell my clients to do the math and figure out the break even point and if it makes sense as per future goals.
    • Budgeting: Prepare for potential increases in your monthly payments.

What to Do During Rate Volatility

Navigating the mortgage market can be tricky, especially when rates are fluctuating. Here's my take, based on years of experience helping people achieve their homeownership goals:

  • Don't Panic: Market fluctuations are normal. Making rash decisions based on short-term rate movements is rarely a good idea.
  • Do Your Research: Understand the different types of mortgages and how they work. Don't rely solely on what you hear from friends or family.
  • Get Professional Advice: Talk to a qualified mortgage broker or financial advisor. They can provide personalized guidance based on your specific financial situation and goals.
  • Focus on Long-Term Goals: Consider your long-term financial goals and how buying a home fits into that plan. Don't let short-term rate fluctuations derail your dreams.
  • Shop Around: Don't settle for the first offer you receive. Get quotes from multiple lenders to ensure you're getting the best possible rate and terms.

What to Expect in the Near Future

Predicting the future is impossible, but we can make educated guesses based on economic trends and expert opinions. Keep an eye on:

  • Inflation Data: Watch for upcoming inflation reports, as they will heavily influence the Fed's decisions.
  • Fed Meetings: Pay attention to the Federal Reserve's meetings and announcements regarding monetary policy.
  • Economic Indicators: Monitor key economic indicators such as GDP growth, employment figures, and consumer spending.

Final Thoughts

The rise of the 5-year ARM to 7.08% today highlights the ever-changing nature of the mortgage market. Whether you're a first-time homebuyer or a seasoned homeowner, staying informed and seeking expert advice is crucial. Remember, knowledge is power when it comes to making sound financial decisions.

By carefully evaluating your options, understanding the risks and benefits of different mortgage products, and working with trusted professionals, you can navigate the mortgage market with confidence and achieve your homeownership goals.

Capitalize on Lower ARM Rates Before They Rise Again

With fluctuating adjustable-rate mortgages (ARMs), savvy investors are exploring flexible financing options to maximize returns.

Norada offers a curated selection of ready-to-rent properties in top markets, helping you capitalize on current mortgage trends and build long-term wealth.

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Mortgage Rates Today – June 23, 2025: Rates Remain Stable With 30-Year FRM at 6.90%

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As of June 23, 2025, mortgage rates in the United States remain stable, with the average 30-year fixed mortgage rate at 6.90%, down slightly from last week's rate of 6.91%. Meanwhile, the average rate for a 15-year fixed mortgage has risen modestly to 5.93%. These figures indicate a slight decline in long-term fixed mortgage rates, which may provide homebuyers and those looking to refinance an intriguing opportunity.

Mortgage Rates Today – June 23, 2025: Rates Remain Stable With 30-Year FRM at 6.90%

Key Takeaways:

  • Current 30-year fixed mortgage rate: 6.90%
  • Current 15-year fixed mortgage rate: 5.93%
  • Average rates for refinances have decreased, with the 30-year refinance rate now at 7.07%.
  • The housing market is showing signs of recovery, influencing mortgage trends.

Current Mortgage Rates

Here’s a closer look at various mortgage rates available today (June 23, 2025).

Loan Type Current Rate 1 Week Change APR 1 Week Change APR
30-Year Fixed Rate 6.90% Down 0.01% 7.32% Down 0.05%
20-Year Fixed Rate 6.37% Down 0.21% 6.80% Down 0.16%
15-Year Fixed Rate 5.93% Up 0.03% 6.20% Down 0.06%
10-Year Fixed Rate 5.85% Down 0.08% 6.04% Down 0.03%
5-Year ARM 7.03% Down 0.18% 7.73% Down 0.06%

(Source: Zillow)

Current Refinance Rates

For those considering refinancing, here are the current rates (June 23, 2025):

Refinance Type Current Rate 1 Week Change APR 1 Week Change APR
30-Year Fixed Refinance 7.07% Down 0.10% 7.32% Down 0.05%
15-Year Fixed Refinance 5.94% Down 0.08% 6.20% Down 0.06%
5-Year ARM Refinance 5.94% Down 0.52% 7.73% Down 0.06%

(Source: Zillow)

The slight changes in these rates suggest a more stable market, making now a potentially favorable time for buyers and homeowners looking to refinance their existing loans.

Monthly Payments Under Current Rates

Now that we've covered the current mortgage and refinance rates, let’s look at how these rates affect monthly mortgage payments. We’ll calculate the monthly payments for various mortgage amounts under the current average rates.

Monthly Payment on $150,000 Mortgage

At a rate of 6.90% for a 30-year fixed mortgage, the monthly payment would be approximately $990. This includes principal and interest but does not consider other costs such as property taxes and homeowner's insurance.

Monthly Payment on $200,000 Mortgage

For a $200,000 mortgage at the same 6.90% rate, the monthly payment rises to about $1,320. Again, this calculation focuses only on the mortgage payment, not including additional escrow items.

Monthly Payment on $300,000 Mortgage

With a mortgage of $300,000 at 6.90%, expect your monthly mortgage payment to be around $1,980. This figure reflects the principal and interest obligations; other fees may increase your total monthly payment.

Monthly Payment on $400,000 Mortgage

For a broader financial commitment, a $400,000 mortgage at 6.90% translates into a monthly payment of roughly $2,640. The payment structure remains aligned with the fixed-rate model, providing a reliable and predictable payment schedule.

Monthly Payment on $500,000 Mortgage

Lastly, for those needing a larger loan amount of $500,000, the monthly payment would be approximately $3,300 at the same interest rate. This amount, while significant, should be viewed in context with the benefits of homeownership, including potential equity growth over time.

Understanding the Market Context

The current mortgage environment is set against a backdrop of economic recovery, with predictions indicating a potential uptick in home sales throughout 2025. The National Association of Realtors forecasts strong growth in existing and new home sales, anticipating a 6% increase in existing home transactions and a 10% rise in new home sales.

Factors contributing to these trends include:

  • Increased home supply: Home construction rates are projected to pick up, helping to ease the ongoing inventory shortage.
  • Stable interest rates: With mortgage rates projected to average around 6.4% in the latter half of 2025, buyers may find themselves in a more favorable borrowing position, encouraging transactions.
  • Continued buyer demand: Even as rates fluctuate, family formations and lifestyle changes are expected to maintain interest in homebuying.

Economic Indicators Affecting Mortgage Rates

Understanding the broader economic context is essential to grasping how today's mortgage rates are influenced. A few key indicators play a significant role in shaping the trends we see in mortgage rates:

  • Consumer Confidence: Consumer confidence is rising as economic conditions stabilize post-pandemic. When people feel optimistic about their financial situations, they're more likely to invest in purchasing homes.
  • Employment Rates: With unemployment rates staying low, more consumers have steady incomes, which boosts the housing market because consumers are in a better position to apply for mortgages.
  • Inflation Rates: Inflation remains a hot topic. The Federal Reserve's actions to combat inflation have direct implications for interest rates. Even just a hint of inflation can impact interest rates, as lenders may charge higher rates to compensate for the differing value of money over time.
  • Federal Reserve Actions: The Fed's decisions regarding interest rates affect the entire economy, including mortgage rates. While they aim to control inflation, any hikes or cuts in the federal funds rate will ripple through to mortgage rates, impacting the housing market.

The Future of Mortgage Rates

Realtors and analysts are keeping a close watch on future mortgage rates. Recent forecasts from key financial institutions draw a mixed picture, yet generally suggest a modest decline in rates over the next year:

  • National Association of Realtors: Chief Economist Lawrence Yun predicts mortgage rates might lower to an average of 6.4% in the second half of 2025 before further declining to 6.1% in 2026. Yun sees this stabilization as beneficial for buyer affordability, having a profound impact on demand in the housing market.
  • Fannie Mae: In their forecasts, Fannie Mae anticipates rates will end 2025 around 6.1%, providing buyers with better affordability options and potentially enhancing home purchases. Their optimism suggests a growing momentum in housing transactions, as buyers feel less restrained by high interest costs.
  • Mortgage Bankers Association: Their projections state that rates will hover around 6.8% throughout the remainder of the year. While they indicate rates may not drastically change in the short term, an improvement in buyer interest will likely lead to increased housing market activity.

Summary:

As we monitor trends throughout June 2025, the steady mortgage rates and favorable predictions regarding home sales and construction indicate a positive shift in the housing market. While today's rates remain relatively high compared to historical lows, they offer opportunities for many — whether you are buying your first home or refinancing your existing mortgage. The shifting dynamics of economic factors, along with anticipated future rate declines, provide a hopeful outlook for potential homebuyers.

Invest Smarter in a High-Rate Environment

With mortgage rates remaining elevated this year, it's more important than ever to focus on cash-flowing investment properties in strong rental markets.

Norada helps investors like you identify turnkey real estate deals that deliver predictable returns—even when borrowing costs are high.

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US-Iran War: A New Threat to America’s Shaky Economy

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Is the US heading for an economic catastrophe because of a war with Iran? Sadly, the answer is a resounding yes. Direct US military intervention in Iran, particularly the June 2025 strikes on Iranian nuclear facilities, throws a massive wrench into an already sputtering US economy. With a contracting GDP, ongoing trade wars, and a looming recession, this conflict could be the tipping point that sends America's economy into a full-blown crisis.

US-Iran War: A New Threat to America's Shaky Economy

A Powder Keg: The Current State of US-Iran Relations

For decades, the relationship between the US and Iran has been a roller coaster of tension and hostility. It all kind of stems from the Iranian Revolution in 1979, and from then onwards, there have been arguments over Iran's nuclear ambitions that only made thing worse.

In June 2025, things went nuclear when Israel launched a unilateral attack. They targeted Iran's nuclear facilities, missile factories, and even senior military officials on June 13th.

Iran retaliated with drone and missile attacks, which basically forced the US to step in with its own strikes on Iran's nuclear program. The temperature’s rising fast. Iran's foreign minister is calling this “an act of war,” and let me tell you, everyone's afraid of a bigger regional conflict.

The Trump administration, which supports Israel's goal with threats of further military action if Iran doesn't back down on that nuclear plan, has now shifted from diplomacy to military aggression. I find it a real shame that years of built-up negotiations came down to strikes.

The situation is extremely tense, especially because Iran's parliament is considering shutting down the Strait of Hormuz, a super-important oil shipping route. If that happens, it could send shock waves all over the world's economy.

An Economy on Shaky Ground

Let's be honest, the US economy was already in a fragile state even before any bombs started dropping. Several factors were already in play:

  • GDP Contraction: The US economy shrank a bit in the first quarter of 2025. It might not seem like much (0.3%), but this was the first decline since 2022. A lot of it happened because people were rushing to buy more imports to avoid the higher tariffs.
  • Trade Tensions: The Trump administration's actions, including the implementation of significant tariffs on April 2, 2025, which was nicknamed “Liberation Day,” hurt the economy, created a big stock market crash, and brought economic uncertainty. As an American, I wonder how we can maintain economic stability with these kinds of radical policies happening.
  • Recession Risks: Major financial institutions like J.P. Morgan are saying there's a higher chance of a recession happening. The Federal Reserve itself is saying that there's as much of a chance of a full-blown economic crisis as there is of slow growth. Pretty grim, right?
  • Market Volatility: The S&P 500 has been all over the place, but it did manage to turn positive in May 2025. Still, this inconsistency makes the economy more unpredictable.
  • Consumer and Business Confidence: People and businesses aren't feeling too confident. With trade wars and increased tariffs, they’re holding back on spending and investing.

A Recipe for Disaster: The Economic Impact of War

Wars have a long history of causing economic pain, especially if the economy is already in trouble. The US-Iran war is likely to hit the US economy in several ways:

  • Oil Price Spikes: Iran is a big oil producer, and the Strait of Hormuz is critical for transporting oil. Disruptions to either of these could cause huge price increases. Brent crude prices are already climbing.
    • Higher oil prices mean higher costs for transportation, manufacturing, and just about everything else. This could lead to higher inflation and reduce people's spending power. Now, that sounds horrible!
  • Increased Military Spending: War costs money, A LOT of money. Sending troops, buying equipment, and providing support all add up. This will put a strain on the federal budget, which is already dealing with rising debt.
    • More borrowing means higher interest rates, which reduces investment and slows down economic growth, which is another problem.
  • Market Uncertainty: Wars always make financial markets nervous. The US-Iran conflict has already caused the stock market to bounce around. Investors are running to safer investments like gold and the US dollar, which tells you they're not feeling good about the economy.
  • Global Trade Disruptions: If the conflict affects shipping routes in the Middle East or leads to more sanctions, it could hurt global trade. This would increase the cost of goods and services, further damaging the US economy.
  • Fiscal and Monetary Policy Challenges: The Federal Reserve is in a tough spot. Higher oil prices could cause inflation, and increased government borrowing could limit the government's financial options. This could lead to tighter monetary policies, which could further slow down the economy.

Specific Risks: The US-Iran War's Potential to Worsen the Crisis

The US-Iran war poses specific risks that could exacerbate the economic crisis:

  • Exacerbating Recession Risks: With the GDP contraction and trade tensions, the US is already close to a recession. The war could be what pushes it over the edge by increasing costs and reducing economic activity.
  • Inflation Pressures: Rising oil prices can lead to higher inflation, damaging consumer buying power and increase business costs.
  • Currency Fluctuations: Initially, the US dollar could grow stronger, but after conflict it could lead to devaluation.
  • Reduced Confidence: The war could hurt business and customer confidence, leading to reduced spending and investment, mixing up the issues of trade tensions.

Expert Opinions: A Cause for Concern

Those who work with financials everyday are showing substantial concern about the US-Iran conflict. Al Jazeera has warned that the global economy could face shock because of the tension of trade disturbances. CNN Business reported that Federal Reserve Chair Jerome Powell is keeping an eye on the situation. Bloomberg highlighted that the US strikes come at a “fragile time for the global economy.”

The Bottom Line: A Looming Economic Threat

The US-Iran war is a serious threat to the US economy. With trade tensions, a shrinking GDP, and the risk of recession already looming, this conflict could be the breaking point. The potential for higher oil prices, increased military spending, market volatility, and trade disruptions could make the economic crisis even worse, potentially pushing the US into recession or, worse, a financial crisis. I think policymakers need to proceed with caution to reduce risk and prevent further economic issues. One thing I'm sure of is that the future is uncertain.

Secure Your Investments Amid Geopolitical Risk

With rising tensions from a potential US‑Iran conflict, economic volatility is on the horizon. Real estate offers a tangible hedge.

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Do Mortgage Rates Go Down During an Economic Recession?

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Do mortgage rates go down during an economic recession? The short answer is, it's complicated, but often, yes, they do. While there's no guarantee, history shows that in recent decades, mortgage rates often decrease during and after a recession. This is largely due to the Federal Reserve's actions to stimulate the economy, but it's important to remember that every recession is different, and factors like inflation play a huge role. Let’s dive into why this happens, looking at past recessions and what it all means for you.

As someone who's followed the housing market and economy for a long time, I know how confusing it can be. Figuring out if now's a good time to buy a home is a big decision, and understanding how recessions affect mortgage rates is a key piece of that puzzle. I'm going to break down the historical data and the factors that drive these changes in a way that's easy to understand.

Let's find out whether mortgage rates typically drop during economic recessions by examining historical data from major U.S. recessions since 1970, drawing from sources like Freddie Mac’s Primary Mortgage Market Survey and other economic analyses.

Do Mortgage Rates Go Down During an Economic Recession?

Historical Analysis of Mortgage Rates During U.S. Recessions

To understand the relationship between mortgage rates and recessions, let’s examine the behavior of 30-year fixed mortgage rates during each major U.S. recession since 1970, based on data from Freddie Mac and other reputable sources.

Recession Period Average Mortgage Rate Range Trend During Recession Key Influences
1973-1975 (Nov 1973 – Mar 1975) 8-9% Stable or increasing High inflation, oil crisis
1980 (Jan 1980 – Jul 1980) 13-14% Increasing Stagflation, Federal Reserve rate hikes
1981-1982 (Jul 1981 – Nov 1982) 16-18% (peaked at 18.63% in Oct 1981) Peaked, then began to decline High inflation, Federal Reserve actions
1990-1991 (Jul 1990 – Mar 1991) ~10% to ~9% Decreasing Stabilizing inflation, economic recovery
2001 (Mar 2001 – Nov 2001) ~8% to ~6.5% Decreasing Federal Reserve rate cuts, dot-com bubble burst
2007-2009 Great Recession (Dec 2007 – Jun 2009) ~6.73% to ~5% Decreasing Federal Reserve quantitative easing, housing market crash
2020 COVID-19 (Feb 2020 – Apr 2020) ~3-4% to <3% Decreasing Federal Reserve emergency measures, low pre-recession rates

1973-1975 Recession

  • Period: November 1973 – March 1975
  • Mortgage Rates: Rates started in the mid-7% range in the early 1970s and rose to around 9.19% by 1974, continuing to climb to 11.2% by 1979 (Atlantic Bay).
  • Trend: Rates did not drop during this recession. The period was marked by high inflation due to the 1973 oil crisis, which drove up borrowing costs as lenders adjusted rates to keep pace with rising prices.
  • Key Influences: The Organization of the Petroleum Exporting Countries (OPEC) oil embargo led to hyperinflation, prompting the Federal Reserve to maintain or increase interest rates to combat rising prices.

1980 Recession

  • Period: January 1980 – July 1980
  • Mortgage Rates: Rates averaged around 13.74% in 1980, reflecting the high inflationary environment of the late 1970s.
  • Trend: Rates continued to rise during this short recession, part of a broader trend that saw rates peak in 1981. The Federal Reserve’s efforts to curb stagflation (high inflation and low growth) kept borrowing costs elevated.
  • Key Influences: Stagflation and the Federal Reserve’s aggressive rate hikes to control inflation were primary drivers, making borrowing expensive.

1981-1982 Recession

  • Period: July 1981 – November 1982
  • Mortgage Rates: Rates reached an all-time high of 18.63% in October 1981, the highest recorded by Freddie Mac (Debexpert). They began to decline slightly toward the end of the recession but remained in the double digits.
  • Trend: Rates peaked during the early part of the recession and started to decline as the Federal Reserve’s policies began to tame inflation. However, they remained high throughout the recession period.
  • Key Influences: The Federal Reserve, under Paul Volcker, raised interest rates to combat inflation, which had risen to 9.5% by 1981. This led to unprecedented borrowing costs, but the subsequent decline in inflation allowed rates to start falling by late 1982.

1990-1991 Recession

  • Period: July 1990 – March 1991
  • Mortgage Rates: Rates were around 10.13% at the start of 1990 and began to decrease, reaching around 9% during the recession and continuing to fall to 6.94% by 1998.
  • Trend: Rates showed a downward trend during this recession, reflecting stabilizing inflation and economic recovery efforts. The 1990s saw a general decline in rates as the economy benefited from low unemployment and solid growth.
  • Key Influences: The stabilization of inflation and the Federal Reserve’s less aggressive monetary policy compared to the 1980s contributed to the decline in rates.

2001 Recession

  • Period: March 2001 – November 2001
  • Mortgage Rates: Rates started at around 8% in early 2001 and dropped to approximately 6.5% by November 2001, according to Freddie Mac data (FRED).
  • Trend: This recession saw a clear decrease in mortgage rates, driven by Federal Reserve rate cuts in response to the dot-com bubble burst and economic slowdown.
  • Key Influences: The Federal Reserve lowered short-term interest rates to stimulate the economy, and the shift of investor focus to fixed-income investments like bonds further reduced mortgage rates.

2007-2009 Great Recession

  • Period: December 2007 – June 2009
  • Mortgage Rates: Rates were around 6.73% in late 2007 and fell to the low-to-mid-5% range by December 2008, reaching 5.4% by 2009.
  • Trend: Rates decreased significantly during this recession, starting even before the official recession period as markets anticipated economic trouble. The decline continued post-recession due to sustained Federal Reserve interventions.
  • Key Influences: The Federal Reserve implemented quantitative easing, buying mortgage bonds to drive down interest rates, and the housing market crash reduced loan demand, further lowering rates.

2020 COVID-19 Recession

  • Period: February 2020 – April 2020
  • Mortgage Rates: Rates were already low, averaging 3.72% in January 2020, and fell to 3.31% by April 2020, dropping to a record low of 2.65% in January 2021.
  • Trend: This brief recession saw mortgage rates decrease sharply, continuing a downward trend that led to historic lows in 2021.
  • Key Influences: The Federal Reserve’s emergency measures, including cutting the federal funds rate to near zero, and low pre-recession rates due to a stable economy, drove rates down.

Why Do Mortgage Rates Behave This Way?

Several factors influence mortgage rate movements during recessions:

  • Federal Reserve Policy: The Federal Reserve plays a pivotal role by adjusting short-term interest rates. During recessions, the Fed often lowers the federal funds rate to encourage borrowing and spending, which indirectly affects long-term mortgage rates. This was evident in the 2001, 2007-2009, and 2020 recessions, where aggressive rate cuts and quantitative easing led to lower mortgage rates (Investopedia).
  • Inflation: High inflation, as seen in the 1970s and early 1980s, pushes mortgage rates upward as lenders demand higher returns to offset rising prices. Conversely, low inflation or deflationary pressures during recessions can lead to lower rates, as observed in the 1990s and 2000s.
  • Economic Demand: Recessions typically reduce demand for mortgages due to job losses and economic uncertainty. Lower demand can lead lenders to offer competitive rates to attract borrowers, contributing to rate declines.
  • Bond Market Dynamics: Mortgage rates are closely tied to the yield on 10-year Treasury bonds. During economic uncertainty, investors often seek safe-haven assets like bonds, increasing bond prices and lowering yields, which pulls mortgage rates down.

Do Mortgage Rates Always Drop During Recessions?

Historical data indicates that mortgage rates do not always drop during recessions. In the 1973-1975 and 1980 recessions, rates were either stable or increasing due to high inflation and economic instability. The 1981-1982 recession saw rates peak at historic highs before beginning to decline. However, in more recent recessions (1990-1991, 2001, 2007-2009, and 2020), rates consistently decreased, often starting before or during the recession and continuing afterward.

This shift reflects changes in Federal Reserve policy over time. Since the 1990s, the Fed has been more proactive in cutting interest rates and implementing measures like quantitative easing to combat recessions, directly impacting mortgage rates. Additionally, lower inflation in recent decades has reduced upward pressure on rates, unlike the high-inflation environment of the 1970s and early 1980s.

Implications for Homebuyers

For homebuyers, a recession can present opportunities if mortgage rates drop, as lower rates reduce borrowing costs and increase affordability. For example, during the 2007-2009 Great Recession, rates fell to the 5% range, making homeownership more accessible for some. Similarly, the record-low rates in 2020-2021 spurred a surge in homebuying and refinancing (LendingTree).

However, recessions also bring economic challenges, such as job losses and reduced consumer confidence, which can make homebuying riskier. Home prices may also decline during recessions due to lower demand, as noted in projections for a potential 2025 recession. Homebuyers should weigh these factors and consult financial advisors to assess their personal circumstances.

In Conclusion

So, to circle back to our original question: Do mortgage rates go down during an economic recession? While it's not a sure thing, historical evidence suggests that they often do, especially in more recent times. This is largely due to the Fed's response to economic downturns, but factors like inflation can also play a role.

Ultimately, the decision of whether or not to buy a home during a recession is a personal one. It depends on your financial situation, your risk tolerance, and your long-term goals. By understanding the factors that influence mortgage rates, you can make a more informed decision.

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Today’s 5-Year Adjustable Rate Mortgage is Down by 5 Basis Points – June 22, 2025

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If you're considering a home purchase or refinance, you're likely wondering about the best option for you. As of June 22, 2025, the national average rate for a 5-Year Adjustable Rate Mortgage (ARM) is 7.03%. Let's explore whether a 5-year ARM is an appropriate option for you, considering the current interest rate environment.

Today's 5-Year Adjustable Rate Mortgage is Down by 5 Basis Points – June 22, 2025

Let's dive right in. According to Zillow, here's a snapshot of the key mortgage rates:

  • 30-Year Fixed Rate Mortgage: 6.90%
  • 15-Year Fixed Rate Mortgage: 5.92%
  • 5-Year ARM Mortgage: 7.03%

While the 30-year fixed rate remains a popular choice, the 5-year ARM is also a significant contender, particularly for those who don't plan to stay in their homes for the long haul.

A Closer Look at the 5-Year ARM

So, what exactly is a 5-year ARM? It's a type of mortgage where the interest rate is fixed for the first five years. After this initial period, the rate adjusts annually based on prevailing market conditions. Think of it as a hybrid – a bit of the stability of a fixed-rate mortgage combined with the potential for savings (or risks) of an adjustable-rate mortgage.

The current national average 5-year ARM mortgage rate is down 5 basis points from 7.08% to 7.03%.

To put it simply, the current rate is:

  • 7.03% on conforming loans
  • 7.65% on Jumbo loans

Why Consider a 5-Year ARM?

There are several reasons why a 5-year ARM might be an attractive option.

  • Lower Initial Interest Rate: Typically, ARMs offer lower initial interest rates compared to fixed-rate mortgages. This can translate to significant savings in your monthly payments during the first five years.
  • Short-Term Homeownership: If you know you'll only be in the home for a few years, a 5-year ARM could be a great choice. You can take advantage of the lower interest rate during your time there and avoid the risk of rate adjustments.
  • Anticipation of Lower Rates: If you believe interest rates will fall in the future, an ARM could be beneficial. When the rate adjusts, it has the potential to decrease, lowering your monthly payments.

The Risks and Considerations of an ARM

It's essential to understand the potential downsides of a 5-year ARM:

  • Interest Rate Adjustments: The biggest risk is the uncertainty of future interest rate adjustments. If rates rise, your monthly payments could increase significantly.
  • Caps on Adjustments: While ARMs have caps on how much the interest rate can adjust, these caps may not be enough to protect you from a substantial increase in your monthly payments.
  • Complexity: ARMs can be more complex than fixed-rate mortgages. It's crucial to understand the terms and conditions of the loan, including how often the rate adjusts, the index it's tied to, and the caps on adjustments.

Comparing Mortgage Rates: A Detailed Breakdown

To help you make an informed decision, let's compare the current mortgage rates for different loan types as of June 22, 2025:

Conforming Loans

PROGRAM RATE 1W CHANGE APR 1W CHANGE
30-Year Fixed Rate 6.90% down 0.03% 7.37% down 0.02%
20-Year Fixed Rate 6.27% down 0.23% 6.75% down 0.15%
15-Year Fixed Rate 5.92% down 0.09% 6.23% down 0.08%
10-Year Fixed Rate 6.01% up 0.01% 6.10% down 0.17%
7-year ARM 7.36% up 0.03% 7.83% down 0.09%
5-year ARM 7.03% down 0.30% 7.73% down 0.13%
3-year ARM — 0.00% — 0.00%

Source: Zillow

Government Loans

PROGRAM RATE 1W CHANGE APR 1W CHANGE
30-Year Fixed Rate FHA 7.40% up 0.57% 8.44% up 0.58%
30-Year Fixed Rate VA 6.39% down 0.01% 6.57% down 0.04%
15-Year Fixed Rate FHA 5.63% down 0.15% 6.64% down 0.11%
15-Year Fixed Rate VA 5.89% down 0.04% 6.18% down 0.09%

Jumbo Loans

PROGRAM RATE 1W CHANGE APR 1W CHANGE
30-Year Fixed Rate Jumbo 7.23% down 0.11% 7.63% down 0.13%
15-Year Fixed Rate Jumbo 6.45% down 0.16% 6.72% down 0.15%
7-year ARM Jumbo 7.53% 0.00% 8.06% 0.00%
5-year ARM Jumbo 7.65% down 0.07% 8.05% down 0.06%
3-year ARM Jumbo — 0.00% — 0.00%

Is a 5-Year ARM Right for You?

Deciding whether a 5-year ARM is the right choice depends entirely on your individual circumstances. Consider the following questions:

  • How long do you plan to stay in the home? If it's less than five years, an ARM could be a good option.
  • What is your risk tolerance? Are you comfortable with the possibility of your monthly payments increasing?
  • What are your financial goals? Are you prioritizing saving money in the short term or seeking long-term stability?

Fixed vs ARM: Which One Wins?

In the fixed versus ARM debate, there's no universal winner. Both have their pros and cons:

  • Fixed-Rate Mortgage: Offers stability and predictability. Your interest rate and monthly payments remain the same for the life of the loan.
  • Adjustable-Rate Mortgage: Offers the potential for lower initial interest rates and monthly payments but carries the risk of rate adjustments.

My Final Thoughts and Recommendations

As someone who has navigated the mortgage maze myself, I can tell you that there's no one-size-fits-all solution. I always suggest working closely with a reputable mortgage lender to explore your options and understand the potential risks and rewards. Don't be afraid to ask questions and seek clarification on anything you don't understand.

In conclusion, the 5-year ARM at 7.03% (as of June 22, 2025) can be a strategic financial move if it aligns with your personal circumstances and risk tolerance. Carefully consider your individual situation and consult with a financial professional to make the best decision for your needs.

Capitalize on Lower ARM Rates Before They Rise Again

With fluctuating adjustable-rate mortgages (ARMs), savvy investors are exploring flexible financing options to maximize returns.

Norada offers a curated selection of ready-to-rent properties in top markets, helping you capitalize on current mortgage trends and build long-term wealth.

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