Norada Real Estate Investments

Mortgage Rates Today: 5-Year Adjustable Rate Plunges by 23 Basis Points – August 21, 2025

by

While most of the headlines you'll see today will focus on the slight uptick in the popular 30-year fixed mortgage, the real story is happening with adjustable-rate loans. For mortgage rates today, the 5-year ARM plunges by 23 basis points – August 21, 2025, bringing the national average rate down to a compelling 7.09%.

This significant drop comes as the average 30-year fixed rate nudged up by 4 basis points to 6.76%, creating a fascinating split in the market that savvy homebuyers should be watching closely. It’s a clear signal that the market is beginning to price in some long-awaited relief from the Federal Reserve.

Mortgage Rates Today: 5-Year Adjustable Rate Plunges by 23 Basis Points – August 21, 2025

In my years of watching the mortgage market, I've learned that you have to look beyond the headlines. The 30-year fixed rate is the king, no doubt. It’s stable, predictable, and what most Americans use to buy a home. But it's often a slow-moving giant. Adjustable-Rate Mortgages (ARMs), on the other hand, are like speedboats—they react much faster to the changing tides of economic expectation.

Today’s 23-basis-point drop in the 5-year ARM is a perfect example. A basis point is simply one-hundredth of a percentage point, so we're talking about a drop of 0.23%. While that might not sound like a lot, in the world of mortgages, it's a significant one-day move.

So, why the sudden dip? It’s all about anticipation. The market is overwhelmingly confident that the Federal Reserve is gearing up to cut its benchmark interest rate at its meeting next month. While fixed-rate mortgages are more closely tied to the long-term outlook of the economy (and the 10-year Treasury yield), ARMs are much more sensitive to short-term interest rate policy. Lenders are essentially betting on a lower-rate environment in the near future, and they are starting to price that optimism into their ARM products today.

A Quick Refresher: How Does an ARM Work?

If you’re not familiar with ARMs, they can seem a bit complicated, but the concept is straightforward. I always break it down for my clients like this:

  • The Introductory Period: An ARM, like a 5-year ARM, has a fixed interest rate for an initial period (in this case, five years). Your payment won't change during this time.
  • The Adjustment Period: After the intro period ends, the rate “adjusts” based on a specific financial index plus a margin set by the lender. This usually happens once a year.
  • The Appeal: The initial rate on an ARM is often lower than on a 30-year fixed mortgage, which can mean a lower monthly payment for the first few years.

The drop we're seeing today makes that initial rate even more attractive, especially for certain types of buyers.

A Look at the Full Rate Board for August 21, 2025

While the ARM story is the most dynamic, let's take a look at the full picture. The 30-year fixed rate remains stubbornly high, and even the 15-year fixed rate is holding steady. This creates a “sticky” situation for many buyers who crave long-term predictability.

Here’s a snapshot of the national average rates for conforming loans today:

PROGRAM RATE 1W CHANGE APR 1W CHANGE
30-Year Fixed Rate 6.76% up 0.09% 7.17% up 0.04%
20-Year Fixed Rate 6.43% down 0.24% 6.90% down 0.08%
15-Year Fixed Rate 5.80% up 0.04% 6.04% down 0.03%
10-Year Fixed Rate 5.79% up 0.31% 6.09% up 0.25%
7-year ARM 7.13% down 0.40% 7.60% down 0.40%
5-year ARM 7.09% down 0.15% 7.63% down 0.18%

Data by Zillow. Last updated: 8/21/2025.

The standout numbers here are the drops in the 5-year and 7-year ARMs. It tells a clear story: the market is confident that rates will be lower in the medium term, even if the long-term outlook keeping 30-year rates high remains a bit cloudy.

The Elephant in the Room: What is the Federal Reserve Doing?

To understand why rates are behaving this way, we have to talk about the Federal Reserve. Their decisions cast a long shadow over the entire economy, and especially over the housing market.

The Great Pause of 2025

Remember the whirlwind of 2022 and 2023? The Fed went on a historic rate-hiking spree to crush runaway inflation. It worked, but it also sent mortgage rates soaring to two-decade highs. Then, in late 2024, they pivoted, delivering three quick rate cuts to steady the ship.

Since then, however, it's been a waiting game. We've gone through five straight Fed meetings in 2025 with no change. Why? The Fed has been walking a tightrope. On one side, you have slowing GDP growth and a cooling labor market (unemployment is now at 4.2%). On the other, you have stubborn inflation that just won't quite get back to their 2% target. It's been hovering around 2.7%, complicated by new tariff pressures.

Inside the Fed, there's even been some disagreement. At the last meeting in July, two governors actually voted for a rate cut, a sign that the pressure to act is building.

All Eyes on September

Now, it looks like the wait is almost over. All signs are pointing to a rate cut at the Fed's next meeting on September 16-17. Market indicators like the CME FedWatch Tool are showing an 85-95% probability of a cut.

Here’s why the market is so confident:

  1. Cooling Inflation: The latest Consumer Price Index (CPI) reading showed inflation moderating to 2.7%. It's not perfect, but it's moving in the right direction.
  2. Weakening Labor Market: The rise in unemployment gives the Fed the justification it needs to act to support the economy without worrying as much about overheating it.
  3. Economic Forecasts: Projections point to a continued economic slowdown, making a preemptive cut a prudent move.

Fed Chair Jerome Powell is speaking tomorrow at the Jackson Hole symposium, and you can bet everyone will be hanging on his every word for a final clue.

The Million-Dollar Question: Should You Consider an ARM Right Now?

This is where my experience as a market observer comes in handy. The data tells us what is happening, but the real question is what it means for you. An ARM isn't for everyone, but in this specific environment, it's becoming a very strategic tool for the right buyer.

Who Should Consider an ARM?

I typically see this work well for a few types of homebuyers:

  • The Short-Term Homeowner: If you know you're likely to move or sell the property in five to seven years (perhaps for a job relocation or to upsize for a growing family), an ARM is a fantastic option. You can enjoy the lower initial rate and sell the home before the first rate adjustment ever hits.
  • The High-Income Earner Expecting a Raise: If you are confident your income will rise significantly in the coming years, you may be comfortable with the risk of a higher payment down the line, knowing you can absorb it or refinance.
  • The Strategic Refinancer: A buyer might take a 5-year ARM today with the explicit plan to refinance into a fixed-rate loan in a year or two, once the Fed's rate cuts have fully filtered through the system and brought 30-year fixed rates down. Today's ARM drop is a bet on that exact scenario.

Who Should Stick with a Fixed-Rate Mortgage?

Despite the allure of a lower ARM rate, the peace of mind of a fixed-rate loan is unbeatable for many. You should probably stick with a fixed rate if:

  • You're on a Tight Budget: If the thought of your monthly payment potentially increasing in five years makes you nervous, an ARM is not for you. Predictability is key.
  • You Plan to Stay in Your Home for the Long Haul: If this is your “forever home,” locking in a rate for 30 years eliminates all future interest rate risk. You'll never have to worry about what the Fed is doing again.
  • You are Risk-Averse: Some people just sleep better at night knowing their largest monthly expense will never change. There's absolutely nothing wrong with that!

Key Dates for Your Calendar

The next few weeks will be pivotal. Here’s what I’m watching:

  • August 22: Fed Chair Powell's speech at Jackson Hole.
  • September 16-17: The next Fed meeting, where a rate cut is highly anticipated.
  • December Meeting: The likely opportunity for a second rate cut in 2025.

My Final Thoughts

Today’s mortgage rate news is a tale of two markets. The fixed-rate world is still stuck in the mud, waiting for a clear signal. But the adjustable-rate market is already sprinting ahead, anticipating the relief that seems to be just around the corner.

The 23-basis-point plunge in the 5-year ARM is more than just a number; it’s a strategic opportunity for the right buyer. It’s a chance to get a lower payment now while positioning yourself to refinance into a great fixed rate later. As always, the key is to understand your own financial situation, your timeline, and your tolerance for risk. The door on ARMs just opened a little wider—it’s worth taking a look inside.

Capitalize on ARM Rates Before They Rise Even Higher

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.

HOT NEW LISTINGS JUST ADDED!

Connect with an investment counselor today (No Obligation):

(800) 611-3060

Get Started Now

Federal Reserve Interest Rate Predictions for the Next 3 Years

by

Are you trying to figure out what the future holds for our wallets is always top of mind. And right now, one of the biggest questions that keeps popping up is: what's going to happen with interest rates in 2025, 2026, and 2027? Well, based on what I'm seeing and digging into, it looks like interest rates are likely to gradually decrease over the next three years from the current federal funds rate of 4.25%-4.50% in mid-2025, potentially settling somewhere between 2.25% and 3.1% by mid-2027.

This easing is expected as inflation continues to cool down and the economy navigates various domestic and global factors. Let's dive deeper into what's driving these predictions and what it could mean for you and me.

Federal Reserve Interest Rates Predictions for the Next 3 Years

Where We Stand Now: Mid-2025

Think back to the last couple of years. We saw some pretty significant hikes in interest rates as the Federal Reserve (or the Fed, as it's often called) tried to get a handle on inflation. It definitely made things more expensive for a lot of us, from taking out a mortgage to even using our credit cards.

But fast forward to mid-2025, and the picture is starting to shift. The Fed actually began to ease things up a bit in late 2024, bringing the federal funds rate down by a full percentage point from its peak of 5.25%-5.50%. As of June 2025, inflation, as measured by the Personal Consumption Expenditures (PCE) index, has come down to around 2.7%, which is getting closer to the Fed's target of 2%. However, and this is important, core inflation (which takes out those often-swinging food and energy prices) is still a bit higher at 2.8%. This is why the Fed is probably still being a little cautious.

In their fifth meeting of 2025 in July, they decided to hold rates steady. According to their Summary of Economic Projections (SEP) from that meeting, the median forecast is for the federal funds rate to be around 3.9% by the end of 2025. That suggests we might see a couple more small rate cuts (around 0.25% each) before the year is out. They're also expecting the economy to grow a bit slower in 2025 (around 2.0%) compared to 2024 (2.8%), and unemployment might tick up slightly to 4.4%. All of this sets the stage for what could be a pretty measured approach to interest rates over the next few years.

What's Going to Shape Interest Rates?

There are a bunch of moving parts that will play a role in where interest rates go from here. It's not just one thing, but a combination of factors that economists like myself keep a close eye on.

  • The Inflation Puzzle: This is probably the biggest piece of the puzzle. The Fed's main job is to keep prices stable, and they aim for that 2% inflation target. Most forecasts I've seen suggest that inflation will continue to come down, maybe to around 2.2% in 2025 and hitting that 2% mark by 2027. But, and there's always a but, things like new tariffs, ongoing global tensions, or disruptions in the supply chain could cause prices to go back up. For example, I remember reading the minutes from the Fed's May 2025 meeting, and they specifically mentioned that tariffs could significantly increase inflation in both 2025 and 2026. That kind of uncertainty is definitely something to watch.

Graph Showing Projected Inflation Rates from 2025 to 2027

  • The Economy and Jobs: The Fed also wants to see as many people employed as possible. Right now, the economy is expected to slow down a bit, with GDP growth maybe around 1.7% in 2026 before picking up again in 2027. Unemployment has been pretty steady, hanging around 4%-4.2% since mid-2024. If the economy slows down too much, the Fed might be more inclined to cut rates to try and boost things. A strong job market, on the other hand, gives them more flexibility.
Graph Showing GDP Growth vs. Unemployment rates from 2025 to 2027
This scatter plot illustrates the relationship between GDP growth and unemployment rates from 2025 to 2027
  • Trade and Government Policies: You can't talk about the economy without mentioning what the government is doing. Policies related to trade, especially tariffs being proposed, could really throw a wrench in the works. Tariffs often lead to higher prices for consumers, which makes the Fed's job of controlling inflation even harder. I've also seen some legal challenges to these tariffs, which adds another layer of unpredictability. Then there are fiscal policies – things like tax cuts or increased government spending. These can sometimes stimulate economic growth but might also fuel inflation, which the Fed would then have to respond to with interest rate adjustments.
  • What's Happening Around the World: We don't live in a bubble, and what other countries are doing with their monetary policy matters too. It looks like other major central banks, like the European Central Bank and the Bank of England, are also expected to ease their rates. This global trend could put some downward pressure on US rates as well. However, if some countries, like Japan, were to start raising their rates, it could create some volatility in the global financial markets.
  • The Market's Take: It's always interesting to see what the financial markets are predicting. What people who are buying and selling bonds and other financial instruments expect can also influence actual rates. I've noticed that some analysts think the peak interest rate we'll see in this cycle might be higher than what others are predicting for the long run. You see a lot of this discussion online, for example, on platforms like X, where some folks are even anticipating rates to fall to around 3.25%-3.50% by the end of 2025.

Looking Ahead: Interest Rate Forecasts (2025-2027)

Interest Rate Predictions Chart

Now, let's get into some specific numbers. Keep in mind that these are just forecasts, and things can change pretty quickly in the world of economics. But based on a variety of expert opinions and projections, here's a general idea of where interest rates might be headed:

2025: Taking it Slow

  • Federal Funds Rate: The Fed itself is projecting around 3.9% by the end of the year, which, as I mentioned, suggests a couple of small cuts. Some analysts, like those at Morningstar, are a bit more optimistic and think we could see rates in the 3.50%-3.75% range, anticipating maybe three cuts due to lower inflation and slower growth. BlackRock seems to think rates will get to around 4% and then might pause to see how the inflation and jobs data look.
  • 10-Year Treasury Yield: This is a key benchmark for many other interest rates. Morningstar is predicting an average of around 3.25% by 2027, and they think we'll probably see yields in the 3.5%-4% range in 2025.
  • 30-Year Mortgage Rate: If you're thinking about buying a home, this is a big one. Forecasts for 2025 seem to suggest mortgage rates will stay relatively high, maybe averaging between 6.3% and 6.8%. Fannie Mae is predicting around 6.3% by the end of the year, and Realtor.com is expecting something similar, around 6.2%.

Graph Depicting Projected 30-Year Mortgage Rates for the next 3 years (2025-2027)

  • Key Things to Watch: How quickly inflation cools down, whether the economy slows as expected, and what happens with those potential tariffs will be the main drivers this year.

2026: More Downward Movement

  • Federal Funds Rate: By the end of 2026, the Fed's current projection is around 3.4%. Morningstar is again a bit more aggressive, forecasting a range of 2.50%-2.75%, believing that inflation will keep falling and there will be more concerns about the economy. TD Economics is in line with the Fed at 3.4%.
  • 10-Year Treasury Yield: Most predictions have this stabilizing somewhere between 3.25% and 3.5%.
  • 30-Year Mortgage Rate: There's a wider range of forecasts here, from about 5.5% to 6.2%. Morningstar is on the lower end at around 5.0%, while Wells Fargo anticipates rates might still be above 6.4%.
  • Key Things to Watch: Whether inflation gets closer to that 2% target, if GDP growth continues to slow to around 1.7% as expected, and if the unemployment rate stays relatively stable around 4.3%.

2027: Finding a New Normal?

  • Federal Funds Rate: Looking further out to the end of 2027, the Fed's median projection is around 3.1%. Morningstar is still anticipating lower rates, in the 2.25%-2.50% range, and S&P Global Ratings is forecasting around 2.9%.
  • 10-Year Treasury Yield: Most likely to settle somewhere between 3% and 3.25%.
  • 30-Year Mortgage Rate: Predictions here range from Morningstar's forecast of 4.25%-4.5% to others suggesting around 4.75%-5.0%.
  • Key Things to Watch: If inflation stays at that 2% level, if GDP growth stabilizes around 1.8%, and if the global trend of easing monetary policy continues.

Here's a quick summary table:

Metric End of 2025 Forecasts End of 2026 Forecasts End of 2027 Forecasts
Federal Funds Rate 3.50% – 3.9% 2.50% – 3.4% 2.25% – 3.1%
10-Year Treasury Yield 3.5% – 4% 3.25% – 3.5% 3% – 3.25%
30-Year Mortgage Rate 6.2% – 6.8% 5.0% – 6.4% 4.25% – 5.0%

What This Means for You and Me

These potential shifts in interest rates can have a real impact on our everyday lives:

  • For Homebuyers: If mortgage rates do come down to the 6%-6.5% range in 2025 and maybe even to 4.75%-5% by 2027, it could definitely make buying a home more affordable. However, we also need to remember that high home prices and a limited number of houses for sale are still big challenges. While lower rates might help with monthly payments, it's unlikely we'll see a return to the really low rates of the past.
  • For Borrowers: If you have a car loan, you might see those rates edge down a bit too, maybe from around 7.53% in 2024 to around 7% in 2025. And credit card interest rates, which can be pretty hefty, might also fall slightly. Lower borrowing costs can provide some financial relief, but again, they're likely to stay above pre-pandemic levels.
  • For Savers: If you've been enjoying the higher yields on savings accounts lately (some have been offering 4%-5% in 2025), you might see those rates come down to 2.5%-3% by 2027 as overall interest rates decline.
  • For Investors: Lower interest rates can sometimes be good for the stock market because it reduces borrowing costs for companies. However, bond investors might want to think about shorter-term bonds or a strategy called laddering to manage the risk of rates potentially going up unexpectedly.

Things That Could Change the Course

It's important to remember that these are just predictions, and there are several things that could throw these forecasts off:

  • Inflation Sticking Around: If those tariffs or other issues cause inflation to stay higher than expected, the Fed might have to hold off on cutting rates or even raise them again.
  • A Sharper Economic Downturn: If the economy slows down more than anticipated, the Fed might need to cut rates more aggressively to try and prevent a recession.
  • Shifts in Government Policy: Changes in trade or fiscal policy could force the Fed to rethink its strategy.
  • Global Events: Unexpected political or economic events around the world can also have a ripple effect on US interest rates.

Final Thoughts

Based on everything I'm seeing, the most likely path for interest rates over the next three years is a gradual decline. The Federal Reserve seems to be aiming for a delicate balance, trying to bring inflation down to its target while also supporting economic growth. For us regular folks, this could mean some relief in borrowing costs down the road, although we probably won't see a return to the very low rates we experienced in the past.

Of course, the economic road ahead is rarely smooth, and there will likely be some bumps along the way. That's why it's so important to stay informed, keep an eye on what the Fed is doing and saying, and maybe even chat with a financial professional to make sure you're making the best decisions for your own situation. As Federal Reserve Chair Jerome Powell himself said back in March 2025, their approach will continue to depend on the data they see coming in. So, while forecasts can give us a general direction, the actual path of the economy is never set in stone.

Jerome Powell and the Fed: 80%+ Chance of Interest Rate Cut in September

by

The financial world is buzzing with anticipation. Is the Federal Reserve, under the watchful eye of Chair Jerome Powell, gearing up for an interest rate cut next month? Based on the latest market signals, it seems incredibly likely, with odds pointing to a strong 80%+ chance of a rate cut in September. This isn't just a small possibility; it's a strong possibility that could ripple through your wallet and the economy in big ways.

As we head into the crucial September 16-17 meeting of the Federal Open Market Committee (FOMC), every economic report, every speech from Fed officials, and every tick on financial markets futures is being dissected. The original question about an 80% chance is actually a bit conservative now.

Looking at the data as of mid-August 2025, the probabilities are even higher, often landing between a solid 83% and a very convincing 94% for at least a quarter-percentage-point (0.25%) reduction. Powell, while influential, doesn't call the shots alone; the FOMC makes the decision as a group. But his words and the Fed's direction heavily influence these outcomes.

Let's break down what's really going on with these interest rates, the economic signs pointing towards a cut, how we can actually measure these probabilities, what Powell has been saying, and what this all means for you. I’ll share some of my own thoughts and experiences to give you a deeper understanding of this complex but important topic.

Jerome Powell and the Fed: 80%+ Chance of Interest Rate Cut in September

Federal Reserve Data Visualization Dashboard

Federal Reserve Data Visualization Dashboard

Historical Federal Funds Rate (2020-2025)

Key Events: 🔴 First Hike (Mar 2022) | 🔴 Peak Rate (Jul 2023) | 🔴 First Cut (Sep 2024)
4.33%
Current Fed Rate
August 2025
2.7%
Latest Inflation
July 2025
84%
Rate Cut Consensus
September 2025

Key Insights

  • The Fed raised rates aggressively from near-zero to 5.5% between March 2022 and July 2023
  • Rate cuts began in September 2024, bringing rates down to current 4.33% level
  • Inflation has steadily declined to 2.7%, approaching the Fed's 2% target
  • Unemployment has risen moderately to 4.2%, signaling some labor market softening
  • Strong market consensus (80%+) expects another rate cut in September 2025
Created by Norada Real Estate Investments

The Fed's Balancing Act: Understanding Interest Rates

First off, what exactly is the Fed doing with interest rates? Think of the federal funds rate as the main thermostat for the economy. It's the rate banks charge each other for overnight loans. When the Fed adjusts this rate, it affects borrowing costs everywhere – from the mortgage on your house and the interest on your car loan to how much it costs businesses to borrow money to expand.

The FOMC, the Fed's decision-making body, meets eight times a year to look at all the economic information and decide whether to raise, lower, or keep rates the same. For a long time, after the COVID-19 pandemic, rates were pretty much at zero to help the economy bounce back. But then, inflation started to climb really high.

To fight that, the Fed started raising rates aggressively in March 2022. They kept going until they hit a peak of 5.25%-5.50% in July 2023. Since then, they’ve been gradually bringing rates down, and as of mid-August 2025, the target range is 4.25%-4.50%. This slow cooling reflects progress on inflation but also a careful watch for any signs of the economy slowing down too much.

Generally, the Fed cuts rates when inflation is under control and they worry about people losing jobs or businesses struggling. They raise rates to cool down an economy that's getting too hot, which can lead to inflation.

Historically, when the Fed starts cutting rates, they often make bigger moves, maybe 50 to 75 basis points at a time. But today, the talk is mostly about a smaller 25-basis-point cut to bring the rate down to 4.00%-4.25%. Some analysts are even talking about the possibility of a larger 50-basis-point cut if the economic data shows a significant slowdown.

The Economic Clues: Why a Cut Looks Likely

So, what's an economy analyst like me seeing that makes a September cut seem so probable? The U.S. economy in mid-2025 presents a bit of a mixed bag, which is exactly the kind of situation where the Fed might decide to lower rates.

  • Inflation is Cooling, But Not Gone: The Consumer Price Index (CPI), which is how we measure inflation, rose by 2.7% year-over-year in July 2025. That’s the same as June, but it's still higher than it was earlier in the year, and notably above the Fed's target of 2%. Core inflation, which strips out food and energy prices, was 3.1%. While this is much lower than the highs we saw in 2022 (over 6%), it's still a bit persistent. This moderate inflation, however, shows that the Fed's previous rate hikes are working, and keeping rates too high might slow things down more than necessary.
  • Jobs Market Shows Some Weakness: The unemployment rate nudged up to 4.2% in July from 4.1% in June. It’s been hovering in that 4.0%-4.2% range for a while. More importantly, job growth, which is how many new jobs are created each month, slowed down significantly. We only saw 114,000 nonfarm payrolls added in July, which was less than many people expected. This slight cooling in the job market is something the Fed watches very closely because one of its main goals is to have as many people employed as possible. If unemployment starts to tick up more consistently, it’s a strong signal for the Fed to ease up on rates.
  • Economic Growth is Slowing Down: The overall economy, measured by Gross Domestic Product (GDP), grew at a rate of 3.0% in the second quarter of 2025. That’s actually pretty good and better than the first quarter. However, when you look at forecasts for the rest of 2025 and into 2026, most experts predict growth will slow down to around 1.5%. This anticipated slowdown is another reason why the Fed might consider cutting rates now, to help keep the economy moving along smoothly – what they call a “soft landing.”

Taken together, these economic signs suggest a scenario where inflation is getting closer to the target, and the economy is slowing without necessarily falling into a recession. But you can see how volatile these numbers can be; that weaker jobs report in July really boosted the chances of a rate cut.

Reading the Tea Leaves: Market Predictions and Probability Tools

That “80%” figure you might have heard is definitely in the ballpark, but as I mentioned, it’s actually on the lower end of what the markets are showing now. The best way to get a real-time look at what the markets expect is by using tools like the CME FedWatch Tool. This tool looks at futures contracts for the federal funds rate and basically shows how traders are betting on future rate decisions.

Here’s a snapshot of what the probabilities looked like around mid-August 2025:

Source/DateProbability of 25bp CutProbability of 50bp CutProbability of No Change
CME FedWatch (Aug 19)82.9%17.1%0%
Bloomberg Analysts (Aug 18)90%+N/A<10%
Investing.com Fed Monitor (Aug 13)91.8%8.2%0%
Barron's (Aug 13)90.9%N/A9.1%
Growbeansprout (Aug 17)83.4%N/A16.6%

(Note: Probabilities are aggregated and may not sum to exactly 100% across all outcomes in every single reporting instance due to how different sources round and present data.)

As you can see, many sources are putting the odds of a cut at 90% or higher. This consensus is a strong signal, but it’s crucial to remember that these are just probabilities. They can change day by day based on new economic reports.

You see these numbers reflected all over social media, too, with people discussing predictions and linking them to how other markets, like cryptocurrency or gold, might react.

What Jerome Powell is Saying (and What It Means)

Jerome Powell, as the head of the Fed, carefully chooses his words. He’s emphasized that the Fed is “data-dependent,” meaning they base their decisions on the latest economic information. In the Fed's July 30, 2025, statement, he shared that they were keeping rates at the current 4.25%-4.50% level while they “assess incoming data, the evolving outlook, and the balance of risks.”

He pointed out that while economic activity has been expanding at a solid pace, inflation is still “elevated,” and the job market has “shown signs of improving.” Crucially, he reiterated the Fed's commitment to getting inflation down to 2% and supporting maximum employment. He also made it clear that the Fed is “prepared to adjust” its policy if they see new risks.

Powell's upcoming appearance at the Jackson Hole Economic Symposium on August 22, 2025, will be closely watched for any hints about the Fed's thinking. There’s always speculation around these events, from thoughts on future rate cuts to even discussions about his own position at the Fed. While he hasn't said a cut is guaranteed, he's certainly not ruling it out. He’s been pushing back against expectations for very rapid interest rate cuts, suggesting a cautious approach.

Weighing the Risks and What Comes Next

Even with such high probabilities, there are always things that could change the Fed's mind. If inflation suddenly becomes “sticky” again – maybe because of things like new tariffs on imported goods driving prices up – the Fed might delay a cut. Or, if upcoming economic data surprises everyone by being much stronger than expected, they might hold off.

Some people still believe the odds are lower if the economy remains strong, citing times in the past when markets were overly optimistic about rate cuts.

So, what does a rate cut – or no cut – mean?

  • For Consumers: Lower interest rates mean it will be cheaper to borrow money. This could mean lower monthly payments on mortgages if you’re looking to refinance or buy a new home, and potentially lower interest rates on car loans and credit cards.
  • For Businesses: More affordable borrowing means businesses might find it easier to invest in new equipment, hire more people, or expand their operations.
  • For Investors: When interest rates go down, investments like stocks and other riskier assets often become more attractive, potentially leading to higher prices. On the flip side, a rate cut can make existing bonds worth less if their fixed interest rate is now lower than new bonds being issued. A cut can also make the U.S. dollar weaker against other currencies. If the Fed doesn't cut rates, it might mean they are more concerned about inflation or economic strength, which could make the stock market a bit nervous.

The Bottom Line

Based on what I'm seeing in the economic data and how the markets are reacting, the chance of the Federal Reserve cutting interest rates in September 2025 is very high, likely in the 85-95% range. This is driven by inflation that's moving in the right direction, a job market that's showing some signs of cooling, and a general expectation that economic growth will slow down.

However, the Fed’s core principle is to be “data-dependent,” so nothing is set in stone until the FOMC officially makes its decision. Always keep an eye on Jerome Powell's comments and any new economic reports that come out between now and the September meeting. These will be the key factors that could either confirm or change the current expectations.

Position Your Portfolio Ahead of the Fed’s Next Move

The Federal Reserve’s next rate decision could shape real estate returns through the rest of 2025. Whether or not a rate cut happens, smart investors are acting now.

Norada Real Estate helps you secure cash-flowing properties in stable markets—shielding your investments from volatility and interest rate swings.

HOT NEW LISTINGS JUST ADDED!

Talk to a Norada investment counselor today (No Obligation):

(800) 611-3060

Get Started Now

Recommended Read:

Federal Reserve Interest Rate Predictions for the Next 2 Years

by

Are you wondering where interest rates are heading? You're not alone! The Federal Reserve's (the Fed's) interest rate decisions affect everything from your mortgage payments to the growth of your investments. So, what's the scoop for the next two years? Expert predictions suggest a gradual decrease in interest rates.

As of August 2025, the federal funds rate sits at 4.25%-4.50%. Experts at the Federal Reserve and major financial institutions anticipate rates moving downward, although the pace and extent of these cuts remain uncertain, driven by factors like inflation, economic growth, and global events. Let's dive deep into what's influencing these predictions and what they mean for you.

Federal Reserve Interest Rate Predictions for the Next 2 Years

Before we get into the nitty-gritty, let's remember why paying attention to interest rates is so important. Think of them as the price of borrowing money.

  • For You: They affect how much you pay for mortgages, car loans, credit cards, and how much you earn on your savings. Lower rates mean cheaper loans but smaller returns on your savings.
  • For Businesses: They influence how much it costs companies to borrow money to invest and expand.
  • For the Economy: They help control inflation (rising prices) and support economic growth.

Basically, they are a big deal for all.

August 2025: Where Interest Rates Stand Right Now

As I write this in August 2025, the Federal Reserve (the Fed, for short) has kept the federal funds rate steady at a range of 4.25% to 4.50% in its July meeting. The Fed kept the rate unchanged for the fifth time in 2025. This federal funds rate is the benchmark interest rate for the US economy. It's what banks charge each other for overnight lending. It affects things like mortgages, credit cards, and savings accounts. The Fed put a hold on hiking interest rates after raising it many times in the recent past to try to curb inflation.

The Fed’s trying to balance controlling inflation, while making sure the economy keeps growing. It's a tough balancing act! The Fed's aiming for 2% inflation over the long term, and it's watching the data like a hawk before making any more moves.

Decoding the Fed's Crystal Ball: The SEP Projections

To get a sense of where the central bankers think rates are headed, you look at the Fed's Summary of Economic Projections (SEP). This report, updated every few months, gives us clues on what the Fed thinks will happen with interest rates, inflation, the economy, and jobs. I like to think of it as the Fed's way of saying, “Here's what we think will happen if we do what we think we should do.” It’s not a guarantee, but it's the best insight we've got.

Interest Rate Projections (according to the Summary of Economic Projections):

Here’s what the Fed's Summary of Economic Projections says it expects:

Year Median Projection Central Tendency Range Implication
2025 3.9% 3.9%–4.4% 3.6%–4.4% Two 0.25% cuts from current levels (4.25%–4.50%)
2026 3.4% 3.1%–3.9% 2.9%–4.1% One additional 0.25% cut
2027 3.1% 2.9%–3.6% 2.6%–3.9% Another 0.25% cut

In plain English, the Fed thinks it will be able to cut rates slowly over the next few years as inflation cools down and the economy stays steady.

Inflation Forecasts:

Since controlling inflation is job number one for the Fed, let's look at what they think will happen with prices. The Fed focuses on something called PCE inflation, which is a way of measuring how much prices are changing.

PCE Inflation:

Year Median Central Tendency Range
2025 2.7% 2.6%–2.9% 2.5%–3.4%
2026 2.2% 2.1%–2.3% 2.0%–3.1%
2027 2.0% 2.0%–2.1% 1.9%–2.8%

Core PCE Inflation:

Year Median Central Tendency Range
2025 2.8% 2.7%–3.0% 2.5%–3.5%
2026 2.2% 2.1%–2.4% 2.1%–3.2%
2027 2.0% 2.0%–2.1% 2.0%–2.9%

These forecasts paint a picture of inflation gradually falling back to the Fed's 2% target by 2027. It is predicted they will begin cutting rates as inflationary pressures ease

Economic Growth and Unemployment:

The Fed is looking at these factors:

Real GDP Growth:

Year Median Central Tendency Range
2025 1.7% 1.5%–1.9% 1.0%–2.4%
2026 1.8% 1.6%–1.9% 0.6%–2.5%
2027 1.8% 1.6%–2.0% 0.6%–2.5%

Unemployment Rate:

Year Median Central Tendency Range
2025 4.4% 4.3%–4.4% 4.1%–4.6%
2026 4.3% 4.2%–4.5% 4.1%–4.7%
2027 4.3% 4.1%–4.4% 3.9%–4.7%

It looks pretty stable. The Fed sees the economy growing a bit each year, and they think the job market will stay pretty tight.

What the Big Banks Are Saying

Graph Showing Interest Rate Predictions for the Next 2 Years

The Fed projections are only one piece of the puzzle. It’s always good to check out what other big players in the financial world are thinking. Here's a snapshot of interest rate predictions from some major institutions:

Institution 2025 Prediction 2026 Prediction 2027 Prediction
Federal Reserve 3.9% 3.4% 3.1%
BlackRock ~4% – –
Goldman Sachs 3.5%–3.75% – –
Morningstar 3.5%–3.75% – 2.25%–2.5%
Fannie Mae (30-yr) 6.3%–6.8% (mortgage) – –
Mortgage Bankers Association 6.8% (early) (mortgage) 6.4% –

A few things stand out to me here:

  • The Consensus: Most experts agree that interest rates will come down over the next two years, but they have a difference on how fast and how far.
  • The Cautious View: BlackRock seems a bit more reserved. They mention things like possible trade wars and other global issues, which could make the Fed think twice about slashing rates too quickly.
  • The Optimists: Morningstar is a bit more bullish, thinking rates could fall more dramatically if inflation cools off faster than most people expect.

Mortgage Rate Predictions:

If you're keeping an eye on mortgage rates:

  • Fannie Mae sees the 30-year fixed rate starting at 6.8% in early 2025 and then dropping to 6.3% later in the year.
  • The Mortgage Bankers Association predicts a drop from 6.8% to 6.4% throughout 2026.

What Could Throw a Wrench in the Works? The Global and Policy Wildcards

Making interest rate predictions is more than just crunching numbers. You need to think about the bigger picture like global events and government policies. Here are a few things that could shake things up:

  • Global Economic Conditions: What's happening in Europe, China, and other parts of the world matters too. If other countries are struggling, it could pull down the U.S. economy.
  • Trade and Tariffs: If the government starts slapping tariffs on goods from other countries, prices could go up!
  • Fiscal Policy: Tax cuts or big government spending could fire up the economy. If the economy grows too quickly, inflation could come roaring back.
  • Geopolitical Events: Wars, political instability, or unexpected crises can send shock waves through the economy, making it harder for the Fed to predict what's going to happen.

What It All Means for You: Consumers and Investors

So, how do these interest rate predictions impact your wallet?

For Consumers:

  • Borrowing Costs: Lower rates mean you'll pay less for mortgages, car loans, and anything else you borrow money for. This could make it easier to buy a home or a new car.
  • Savings Returns: The downside? You'll probably earn less on your savings accounts and CDs.

For Investors:

  • Bonds: When rates fall, bond prices tend to rise. So, if you already own bonds, you could see some gains. But remember, new bonds will pay lower interest rates.
  • Stocks: Lower rates can be good for stocks because they make it cheaper for companies to borrow money and grow. But if the Fed is cutting rates because the economy is faltering, that could temper the optimism.
  • Real Estate: Lower mortgage rates could fire up the housing market, potentially pushing home prices up.

Here’s a quick cheat sheet:

Financial Decision Impact of Lower Rates (2025-2027)
Buying a Home Cheaper mortgages, increased affordability
Savings Accounts Lower returns, reduced interest earnings
Stock Investments Potential gains, but risks remain
Bond Investments Higher prices for existing bonds, lower new yields

The Bottom Line and My Two Cents

The interest rate predictions for 2025-2027 point to a gradual easing, but the road ahead is anything but smooth. The Fed, along with financial institutions, anticipates rates declining from the current 4.25%–4.50% range to around 3.1% by 2027. I believe this path is reasonable because inflation is very hot now. But the Fed might cut more or less.

As I watch this situation of rate cuts unfold, there is a risk of some external factors blowing it all off course.

So, what should you do? Stay informed, be realistic, and remember that nobody has a crystal ball.

Recommended Read:

Today’s Mortgage Rates – August 20, 2025: 30-Year Fixed Rate Climbs by 4 Basis Points

by

Mortgage rates today, August 20, 2025, show a slight uptick with the national average 30-year fixed mortgage rate rising to 6.71%, up 4 basis points from last week, while refinance rates also increased modestly. However, markets are largely focused on the Federal Reserve’s anticipated interest rate cut in September, which could push mortgage rates down in the coming weeks.

Today's Mortgage Rates – August 20, 2025: 30-Year Fixed Rate Climbs by 4 Basis Points

Key Takeaways

  • 30-year fixed mortgage rate rose to 6.71%, up 4 basis points from last week.
  • 15-year fixed mortgage rate remains steady at 5.80%.
  • 5-year ARM mortgage rate increased slightly to 7.32%.
  • Refinance rates also climbed, with 30-year fixed refinance rates at 6.94%.
  • Fed signaling a high probability (about 90%) of cutting rates 25 basis points in September 2025.
  • Most forecasts predict mortgage rates will stay above 6% through 2025 and not drop below 6% until Q3 2026.
  • Fed's anticipated rate cuts could stimulate a decline in mortgage rates in the near term.

Current Mortgage Rates Overview for August 20, 2025

Mortgage rates today reflect a slight increase compared with last week’s averages, with the 30-year fixed rate climbing marginally to 6.71%. This figure has remained in a narrow range over the year, typically fluctuating between 6.6% and 6.8%. This persistence is attributable to ongoing inflation concerns and the Federal Reserve’s cautious approach to monetary policy.

Loan Type Rate (Aug 20, 2025) Weekly Change APR APR Weekly Change
30-Year Fixed 6.71% +0.04% 7.15% +0.03%
20-Year Fixed 6.43% -0.24% 6.90% -0.08%
15-Year Fixed 5.80% +0.03% 6.09% +0.02%
10-Year Fixed 5.48% 0.00% 5.84% 0.00%
7-Year ARM 7.45% -0.08% 8.12% +0.12%
5-Year ARM 7.32% +0.08% 7.81% 0.00%

(Source: Zillow)

Refinance Rates Also Trending Slightly Higher

Refinancing rates have followed a similar trajectory, with the national average 30-year fixed refinance rate rising to 6.94%, a 3-basis-point increase from the prior week. This indicates that despite some investors anticipating relief from lower borrowing costs, refinance rates remain elevated for now.

Refinance Loan Type Rate (Aug 20, 2025) Weekly Change
30-Year Fixed Refinance 6.94% +0.03%
15-Year Fixed Refinance 5.79% +0.04%
5-Year ARM Refinance 7.84% +0.09%

(Source: Zillow)

Why Are Mortgage Rates Still High? The Fed’s Role Explained

The Federal Reserve’s monetary policies drive mortgage rate trends significantly. Since the pandemic, the Fed moved from ultra-low interest rates to aggressive rate hikes starting in 2022 to fight inflation. This led mortgage rates to surge to levels not seen in two decades.

  • 2021-2023: Pandemic recovery policies kept rates low, then the Fed raised the federal funds rate by 5.25% in big steps to curb inflation.
  • Late 2024: The Fed cut rates three times, but mortgage rates remained elevated.
  • 2025: The Fed has paused rate changes for five meetings but looks poised to cut rates in September 2025 due to economic slowdowns and persistent inflation pressures.

The anticipated September 16-17 Fed meeting is seen as a potential turning point, with an 89-91% chance the Fed will lower rates by 25 basis points. This cut could set the stage for mortgage rates to finally dip below current stubborn strains.

Economic Factors Influencing Mortgage Rates

  • Inflation is still sticky but moderating: Consumer Price Index (CPI) data from July 2025 showed inflation slightly below economists’ expectations but remained a concern.
  • Job market cools: Employment growth slowed notably, with unemployment nudging up to 4.2%. This weak labor market supports the Fed's case for rate cuts.
  • Fed's cautious optimism: The Fed aims to balance inflation control without triggering a recession.

Forecasts for Mortgage Rates: What Experts Are Saying

Multiple reputable sources provide consistent forecasts about mortgage rates for the remainder of 2025 and into 2026:

Organization Mortgage Rate Forecast Notes
National Association of REALTORS® Average 6.4% in H2 2025, dipping to 6.1% in 2026 Emphasizes rate’s role in affordability and buyer demand
Realtor.com Easing slowly, matching prior year at ~6.4% year-end Moderate relief expected but rates remain high
Fannie Mae ~6.4% end of 2025; not under 6% until Q3 2026 Long wait for sub-6% rates
Mortgage Bankers Association Around 6.7% end of 2025; 6.3% in 2026 Reflects inflation risks impacting rates

Mortgage Payment Example

Let’s say a buyer wants to take out a 30-year fixed mortgage loan for $300,000 today at the current average rate of 6.71%. Their monthly payment for principal and interest would be about $1,942. Keep in mind this doesn’t include other costs like property taxes or insurance, which would add to the total monthly amount.

Now, if the Federal Reserve follows through and cuts interest rates next month as expected, bringing the mortgage rate down to around 6.4%, that same buyer’s monthly payment would drop to about $1,892. This means they would save roughly $50 each month just on principal and interest with the lower rate.

Current ARM (Adjustable-Rate Mortgage) Trends

ARM rates remain noticeably higher than fixed rates, reflecting market uncertainty:

  • 5-year ARM fixed at 7.32%, up slightly.
  • 7-year ARM dipped a touch to 7.45%.

ARM products might appeal to some borrowers betting on declining rates but come with inherent risks of rate increases.

Broader Implications of Mortgage Rate Movement

Mortgage rates are not just numbers for homeowners; they affect the entire economy:

  • Housing affordability: As rates stay high, monthly mortgage payments increase, putting pressure on buyer budgets.
  • Home sales: High financing costs can suppress home buying demand, affecting market turnover.
  • Refinancing activity: Higher refinance rates reduce incentives for homeowners to refinance, impacting disposable income.
  • Economic growth: Lower mortgage rates can stimulate construction, real estate, and related sectors.

The looming Fed decision and its impact on mortgage rates will thus be closely watched by investors, buyers, and policymakers alike.

Summary of Mortgage and Refinance Rates on August 20, 2025

Category Rate Weekly Change
30-Year Fixed Mortgage 6.71% +0.04%
15-Year Fixed Mortgage 5.80% +0.03%
5-Year ARM Mortgage 7.32% +0.03%
30-Year Fixed Refinance 6.94% +0.03%
15-Year Fixed Refinance 5.79% +0.04%
5-Year ARM Refinance 7.84% +0.09%

This situation shows how difficult it is to time the market exactly, and borrowers usually benefit more by concentrating on their own financial situation instead of trying to guess how rates will change.

Capitalize Amid Rising Mortgage Rates

With mortgage rates expected to remain high in 2025, it’s more important than ever to focus on strategic real estate investments that offer stability and passive income.

Norada delivers turnkey rental properties in resilient markets—helping you build steady cash flow and protect your wealth from borrowing cost volatility.

HOT NEW LISTINGS JUST ADDED!

Speak with a seasoned Norada investment counselor today (No Obligation):

(800) 611‑3060

Get Started Now

California Housing Market Decline: Sales Drop for 4th Straight Month

by

The California housing market is showing signs of cooling, with home sales dipping below last year's figures for the fourth month in a row. This trend, primarily driven by persistently high mortgage rates and economic uncertainty, means fewer homes are changing hands compared to the same period last year.

I can tell you this slowdown isn't entirely surprising. We've been in a bit of a holding pattern, and the latest report from the California Association of REALTORS® (C.A.R.) confirms what many in the industry have been feeling. Existing, single-family home sales in July dropped by 4.1 percent compared to July of last year, settling at a seasonally adjusted annualized rate of 261,820 homes.

That's a noticeable dip from the 272,990 homes sold during the same month in 2024. It's the fourth consecutive month of year-over-year sales declines, which has pushed the year-to-date sales into negative territory.

California Housing Market Decline: Sales Drop for 4th Straight Month

Why the Slowdown? The Usual Suspects and Some New Twists

It's easy to point fingers at one single cause, but in real estate, it's almost always a mix of factors. The big one, and the one everyone’s talking about, is mortgage rates. Even though they've dipped to their lowest point since last October – averaging 6.72 percent in July – they still remain a significant hurdle for many potential buyers. When you compare this to the much lower rates we saw a couple of years ago, the monthly payment difference is substantial. This effectively prices some buyers out of the market or forces them to look at smaller, less expensive homes.

Beyond mortgage rates, I've seen firsthand how economic uncertainty plays a huge role. When people are worried about their jobs, inflation, or the general direction of the economy, they tend to be more cautious with big financial decisions, like buying a house. This caution translates into fewer people actively searching for homes and making offers.

C.A.R. President Heather Ozur echoed this sentiment, noting that “some buyers stepped back, waiting for more certainty in the market and broader economy.” It’s a rational move for many, and it directly impacts sales numbers.

Home Prices: A Slight Dip, But What Does It Really Mean?

While sales volume is down, home prices haven't taken a nosedive. The statewide median home price in July was $884,050. This is a slight decrease of 0.3 percent from July 2024, when the median price was $886,420. It's also down 1.7 percent from June, marking the third consecutive monthly decline.

This might sound counterintuitive—lower sales but only a small price drop? From my perspective, this is often a sign of a market that's rebalancing rather than crashing. When demand cools, sellers might need to adjust their expectations. However, California’s housing market is notoriously resilient due to supply constraints and consistent demand in many areas. So, a small dip in the median price doesn't mean a fire sale; it suggests a more moderate market.

Jordan Levine, C.A.R.’s Senior Vice President and Chief Economist, pointed out that with inventory reaching a plateau, the market is indeed cooling. He also offered a hopeful note: “Even with recent price declines, California’s median home price could still see a modest annual increase in 2025, provided the market stabilizes in the coming months.” That's the key phrase: stabilizes.

Regional Pockets of Activity: Not All of California is Moving at the Same Pace

It's crucial to remember that California is a huge and diverse state, and its housing market is equally varied. What's happening in one region might be completely different in another.

Let’s break down some of the regional highlights from the C.A.R. report:

  • Regions Showing Growth:
    • The Far North saw a modest 4.8 percent increase in sales compared to last year.
    • The Central Coast also experienced a bump, with sales up 1.7 percent year-over-year.
  • Regions Experiencing Declines:
    • The San Francisco Bay Area faced the largest regional decline, with sales falling by 4.1 percent. This is an area that often sets the pace, so its slowdown is significant.
    • Southern California and the Central Valley both saw more moderate pullbacks of 1.7 percent and 1.5 percent, respectively.

When we look at median home prices by region for July:

  • Regions with Price Increases:
    • The Central Coast led the way with a 4.9 percent gain compared to last year.
    • The Far North saw a 3.1 percent rise.
  • Regions with Stable or Declining Prices:
    • The Central Valley and San Francisco Bay Area median prices held steady.
    • Southern California experienced a slight 0.7 percent dip.

It's fascinating to see how different economic factors and local supply-and-demand dynamics play out across the state. For instance, areas in the Far North that might be more affordable or have different job markets could be less affected by national economic headwinds.

County-Level Snapshot: Where the Action (or Lack Thereof) Is

Drilling down further, the county-level data paints an even more detailed picture:

  • Counties with Strong Sales Growth:
    • Imperial County was a standout, with an astonishing 116.1 percent jump in sales year-over-year. This often happens in more affordable areas as buyers are priced out of more expensive regions.
    • Mariposa County saw a 91.7 percent increase, followed by Butte County with a 41.6 percent rise. It’s interesting to note that half of the counties with sales gains achieved double-digit growth.
  • Counties with Significant Sales Declines:
    • Mendocino County experienced a sharp 26.7 percent drop in sales.
    • Lake County saw a 22.6 percent decline.
    • Madera County was down 21.3 percent.

On the price front:

  • Counties with Notable Price Increases:
    • Mono County had the biggest surge at 56.5 percent.
    • Santa Barbara County jumped 32.4 percent.
    • Tehama County saw a 27.6 percent increase.
  • Counties with Price Decreases:
    • Trinity County saw the largest drop at 19.2 percent.
    • Mendocino County was down 15.0 percent.
    • Plumas County fell 14.6 percent.

This high-level view shows that while the statewide trend is downward in terms of sales volume, there are specific areas performing very differently. This highlights the importance for buyers and sellers to focus on local market conditions rather than broad generalizations.

Inventory and Time on Market: The Balance of Supply and Demand

One of the key indicators I always look at is the unsold inventory index (UII), which tells us how long it would take to sell the current supply of homes at the current pace. In July, the UII was 3.7 months, up from 2.9 months in July 2024. This is a clear sign that there’s more inventory available relative to the number of sales, which tends to give buyers more negotiating power.

We also saw that total active listings were up a significant 37.7 percent from a year ago, reaching a 69-month high. This is a big deal. More homes on the market mean less competition for buyers and can put downward pressure on prices. However, the report also notes that the pace of growth in active listings has slowed down, which might indicate that new listings aren't coming onto the market as rapidly as they were a few months ago.

And what about how quickly homes are selling? The median number of days it took to sell a California single-family home was 28 days in July. This is up from just 20 days in July 2024. Homes are staying on the market longer, which aligns with the idea of a cooling market and more choices for buyers.

The sales-to-list-price ratio also confirms this shift. It was 98.5 percent in July 2025, down from a perfect 100 percent in July 2024. This means that, on average, homes are selling slightly below their asking price, a departure from the bidding wars we saw previously.

What's Next? Navigating Uncertainty

So, where does this leave us heading into the latter part of the year? The sentiment from C.A.R. is cautiously optimistic. The recent dip in mortgage rates is a positive sign, potentially bringing some buyers back into the game. However, the persistent inflation and economic concerns mean that the market could remain soft through August.

As a professional in this field, I believe the key will be stability – stability in mortgage rates and stability in the broader economy. When people feel more confident about their financial futures, they are more likely to make the significant commitment of buying a home.

For buyers, this period could present opportunities. With homes staying on the market longer and less intense competition, buyers might find more room for negotiation. However, it's still essential to be well-prepared and understand the local market dynamics.

For sellers, patience and realistic pricing are key. While the market isn't as frenzied as it once was, a well-priced and well-presented home can still attract strong interest. Understanding the current market value based on recent comparable sales is more critical than ever.

The California housing market is always evolving. While sales may be trailing last year's levels for now, it’s a complex picture with regional variations and subtle shifts that point towards a market that's finding a new equilibrium. Keeping an eye on mortgage rates, economic indicators, and local inventory levels will be crucial for anyone involved in buying or selling property in the Golden State.

“Invest in Real Estate in the Growing Markets”

Discover high-quality, ready-to-rent properties designed to deliver consistent returns.

Contact us today to expand your real estate portfolio with confidence.

HOT NEW LISTINGS JUST ADDED IN MULTIPLE MARKETS!

Contact our investment counselors (No Obligation):

(800) 611-3060

Get Started Now

Related Articles:

California Mortgage Rates Today See a Spike of 22 Basis Points – August 20, 2025

by

Are you keeping an eye on mortgage rates in California? As of today, August 20, 2025, potential homebuyers are facing a noticeable shift. The average 30-year fixed mortgage rate in California has jumped by 22 basis points, reaching 6.89%. This increase could impact your affordability and overall home-buying strategy, so let's dive into what's happening and what it means for you.

California Mortgage Rates Today See a Spike of 22 Basis Points – August 20, 2025

How Does This Affect You?

A 22 basis point increase might not sound like a lot, but it can add up significantly over the life of a loan. Let's break down how this impacts your wallet:

  • Higher Monthly Payments: With a higher interest rate, you'll pay more each month for your mortgage.
  • Increased Total Interest Paid: Over 30 years, even a small rate increase can result in thousands of dollars more in interest paid.
  • Reduced Affordability: If rates rise, the amount you can afford to borrow might decrease, potentially impacting the type of home you can buy. If you get pre-approved, ensure to get the latest rates so you get an accurate indication of what to expect.

Breaking Down the Numbers: California Mortgage Rates on August 20, 2025

Here's a look at the current mortgage rates in California based on data from Zillow:

California Conforming Loans

PROGRAM RATE 1W CHANGE APR 1W CHANGE
30-Year Fixed Rate 6.89% up 0.21% 7.06% down 0.06%
20-Year Fixed Rate 7.02% 0.00% 7.13% 0.00%
15-Year Fixed Rate 5.84% up 0.08% 5.94% down 0.11%
10-Year Fixed Rate 6.01% 0.00% 6.10% 0.00%
7-year ARM 7.44% 0.00% 7.51% 0.00%
5-year ARM 7.38% up 0.11% 7.52% down 0.29%
3-year ARM — 0.00% — 0.00%

California Government Loans

PROGRAM RATE 1W CHANGE APR 1W CHANGE
30-Year Fixed Rate FHA 6.00% down 0.02% 7.00% down 0.03 %
30-Year Fixed Rate VA 6.05% down 0.13% 6.27% down 0.12%
15-Year Fixed Rate FHA 5.50% down 0.03% 6.46% down 0.03%
15-Year Fixed Rate VA 5.66% down 0.17% 6.02% down 0.17%

California Jumbo Loans

PROGRAM RATE 1W CHANGE APR 1W CHANGE
30-Year Fixed Rate Jumbo 6.90% up 0.01% 7.13% down 0.18%
15-Year Fixed Rate Jumbo 6.17% up 0.04% 6.30% down 0.10%
7-year ARM Jumbo 7.42% 0.00% 8.00% 0.00%
5-year ARM Jumbo 8.06% up 0.37% 8.31% up 0.28%
3-year ARM Jumbo — 0.00% — 0.00%

Key Takeaways from the Data:

  • The standard 30-year fixed-rate mortgage is indeed up significantly.
  • Adjustable-rate mortgages (ARMs) show mixed movement, especially in the Jumbo loan category, demanding extra caution and meticulous review.
  • Government-backed loans (FHA and VA) show a continued decrease, presenting a silver lining for eligible borrowers.

Comparing California to the National Average

It's worth noting that California mortgage rates today are 19 basis points higher than the national average rate of 6.70%. This might be due to factors specific to the California housing market, such as high demand, limited inventory, and a strong economy.

What Can You Do?

If you're in the market for a home in California, here are some steps you can take to navigate these rising rates:

  • Shop Around: Don't settle for the first rate you see. Compare offers from multiple lenders to find the best deal.
  • Improve Your Credit Score: A higher credit score can qualify you for a lower interest rate.
  • Consider a Shorter Loan Term: While monthly payments will be higher, a 15-year mortgage can save you a substantial amount on interest over the life of the loan.
  • Increase Your Down Payment: A larger down payment reduces the amount you need to borrow, which can lower your monthly payments and overall interest costs.
  • Lock in Your Rate: If you find a rate you're comfortable with, consider locking it in to protect yourself from further increases.
  • Talk to a Mortgage Professional: A mortgage broker or loan officer can guide you through the process and help you find the best loan for your situation. I've personally found their insights invaluable in navigating complex financial decisions.
  • Consider Government Loan Programs: If eligible, explore FHA or VA loans as they may offer more favorable terms than conventional mortgages.

Fixed vs. Adjustable-Rate Mortgages: Weighing the Options

With rates fluctuating, you might be wondering about fixed-rate versus adjustable-rate mortgages.

  • Fixed-Rate Mortgages: Offer stability with an interest rate that remains consistent throughout the loan term. This is good for budgeting and predictability.
  • Adjustable-Rate Mortgages (ARMs): Start with a lower interest rate that adjusts after a set period. While potentially saving money initially, they carry the risk of rate increases. You need to evaluate your risk appetite carefully.

The Importance of APR

As the data shows, the APR (Annual Percentage Rate) is crucial for comparing loans. It reflects the total cost of borrowing. It includes not only the interest rate, but also lender fees, points, and other charges. Focusing on APR provides a more accurate picture of the true cost of your mortgage.

Looking Ahead: What's Next for California Mortgage Rates?

Predicting future mortgage rates is difficult because numerous economic factors can influence the market.

  • Keep an eye on inflation reports and the Federal Reserve announcement, as these often drive rate movements. Market signals now strongly suggest an 85-95% chance of a Federal Reserve rate cut at the September 16-17 meeting, according to tools like the CME FedWatch Tool.
  • Monitor housing market trends in California, as strong demand can put upward pressure on rates.
  • Don't panic! Mortgage rates fluctuate, and there are always opportunities for informed homebuyers to find favorable loans.

Final Thoughts: The jump in California mortgage rates today, highlights the importance of staying informed and prepared when navigating the home-buying process. By understanding the factors influencing rates, exploring your options, and working with experienced professionals, you can make informed decisions and achieve your homeownership goals. Good luck!

Capitalize Amid Rising Mortgage Rates

With mortgage rates expected to remain high in 2025, it’s more important than ever to focus on strategic real estate investments that offer stability and passive income.

Norada delivers turnkey rental properties in resilient markets—helping you build steady cash flow and protect your wealth from borrowing cost volatility.

HOT NEW LISTINGS JUST ADDED!

Speak with a seasoned Norada investment counselor today (No Obligation):

(800) 611‑3060

Get Started Now

New Housing Construction: Starts Rise, Permits Fall in July 2025

by

Are you curious about the state of new housing construction? Do you want to know where the housing market is headed? Here's the bottom line: New housing starts are up, suggesting a potential rebound, but permits are down, indicating caution ahead. July 2025 saw a mixed bag of signals, with starts exceeding expectations but underlying uncertainties persisting.

According to the U.S. Census Bureau and Department of Housing and Urban Development, overall housing starts increased 5.2% monthly in July to a seasonally adjusted annual rate of 1.43 million units. Overall, permits fell 2.8% monthly to 1.35 million annualized.

New housing construction trends are influencing everything from the size and design of homes to the materials used and the technologies incorporated. In the recent months, we have seen the new housing construction starts fall in the United States.

Housing Starts refer to the number of new residential construction projects that have begun during any particular month. Estimates of housing starts include units in structures being rebuilt on an existing foundation.

Building permits, on the other hand, are issued by local governments to allow builders to begin the construction of a new home or to make significant renovations to an existing home. Building permits are usually required for any new construction or remodeling that involves changes to the structural or mechanical systems of a home.

Housing construction refers to the actual building of the residential structure, which includes everything from laying the foundation to framing the walls, installing electrical and plumbing systems, and finishing the interior and exterior of the building.

The sequence of new housing construction events typically goes as follows:

A builder obtains a building permit from the local government, which allows them to start construction on a new housing unit.
Once construction begins, it is counted as a housing start. The construction process continues until the housing unit is completed and ready for occupancy, at which point it is considered part of the housing stock.

So, building permits come first, followed by housing starts, and then housing construction. However, it is important to note that not all permits lead to starts and not all starts to lead to completed construction. Some permits may expire before construction begins, and some starts may be delayed or canceled due to various reasons such as changes in market conditions or financing issues.

New Housing Construction: Starts, Permits, Completions 2025

New Housing Construction: Starts, Permits, Completions 2025
Source: U.S. Census Bureau

Building Permits: A Glimpse into the Future

Building permits are like tea leaves for the housing market. They tell us what builders are planning to do in the coming months. When permit numbers decline, it suggests builders are becoming more cautious about starting new projects.

Here's a quick look at the July 2025 permit data:

  • Privately-owned housing units authorized by building permits: 1,354,000 (seasonally adjusted annual rate)
  • This is 2.8% below the revised June rate of 1,393,000.
  • It is also 5.7% below the July 2024 rate of 1,436,000.
  • Single-family authorizations: 870,000 (a slight increase of 0.5% from June)
  • Authorizations of units in buildings with five units or more: 430,000

What does this tell us? While single-family permits saw a tiny uptick, the overall trend is downward. This indicates that builders are becoming less confident in the market's short-term prospects. High interest rates and rising construction costs could be playing a role in this decision to build less.

Housing Starts: Breaking Ground

While permits reflect future intentions, housing starts show us what's actually happening on the ground right now. These are the number of new homes that builders have begun constructing.

Here's the July 2025 housing starts data:

  • Privately-owned housing starts: 1,428,000 (seasonally adjusted annual rate)
  • 5.2% above the revised June estimate of 1,358,000
  • 12.9% above the July 2024 rate of 1,265,000
  • Single-family housing starts: 939,000 (2.8% above the revised June figure)
  • Units in buildings with five units or more: 470,000

This data paints a more optimistic picture than the permit numbers. Housing starts are up across the board, suggesting that builders are still pushing forward with projects, possibly fueled by a need to meet existing demand. Perhaps they are optimistic about the longer term, betting that rates will eventually come down and that demand will continue to grow.

Regional Trends in Housing Starts:

Interestingly, there are significant regional differences in housing starts. Here's a summary of combined single-family and multifamily starts on a year-to-date basis:

  • Northeast: 10.2% higher
  • Midwest: 17.7% higher
  • South: 2.4% lower
  • West: 0.5% lower

The South's surprising drop is interesting. The region is one of the fastest growing regions in the U.S, particularly for single-family construction activity, getting an unexpected boost in July, powered by a building surge. Single-family starts rose 13% on the month and 22% annually.

Housing Completions: Bringing Homes to Market

The final piece of the puzzle is housing completions. This tells us how many new homes are actually finished and ready for occupancy.

Here's the July 2025 housing completion data:

  • Privately-owned housing completions: 1,415,000 (seasonally adjusted annual rate)
  • 6.0% above the revised June estimate of 1,335,000
  • 13.5% below the July 2024 rate of 1,635,000
  • Single-family housing completions: 1,022,000 (11.6% above the revised June rate)
  • Units in buildings with five units or more: 385,000

Completions also rose in July but are lower year-on-year, suggesting perhaps that supply-chain issues from the past are still slowing down construction or that builders are still very cautious about building beyond existing demand.

The Big Picture: What Does It All Mean?

So how do we make sense of these seemingly contradictory numbers? Here's my take:

  • Short-Term Caution, Long-Term Optimism: The drop in building permits suggests builders are wary about the short-term outlook. They're likely factoring in the impact of high interest rates, inflation, and persistent supply chain issues. However, the rise in housing starts indicates they are still committed to meeting existing demand and are perhaps optimistic about the longer-term prospects of the market.
  • Regional Variations are Key: The housing market is not monolithic. Conditions vary significantly depending on the region. The Northeast and Midwest are seeing stronger growth in new construction, while the South and West are experiencing slowdowns. I expect it to be more of a nuanced and hyper-localized trend, given the overall macro-economic picture.
  • Multifamily Driving Growth Multifamily construction has rebounded after falling to a 10-year low in 2024 – mainly to cater to affordability challenges in the single-family market, which have kept young families renting for much longer.
  • Affordability Remains a Major Challenge: Even with the increase in housing starts and completions, affordability remains a significant hurdle for many prospective homebuyers. Persistently high mortgage rates and rising home prices are making it difficult for people to enter the market.

What to Watch For

Going forward, here are some key factors to keep an eye on:

  • Interest Rates: Any significant movements in interest rates will have a major impact on the housing market
  • Inflation: Continued high inflation will put pressure on construction costs and consumer spending
  • Supply Chain Issues: Disruptions to the supply chain can delay projects and increase costs
  • Consumer Confidence: How consumers feel about the economy will definitely influence their willingness to buy homes.

While the new housing construction market in 2025 presents a mixed picture, I believe that fundamental demand and supply imbalance could still drive growth. While starts are exceeding permits in some cases, more construction is needed and these numbers are always subject to change. As the market continues to evolve, staying informed will be key for those looking to navigate the complex world of real estate.

New Housing Construction Forecast 2025

So, what does all this mean for the rest of 2025? Here are a few key takeaways and factors to watch:

  1. Interest Rate Sensitivity: The housing market is extremely sensitive to interest rate changes. If rates stay high, affordability will remain a challenge, potentially dampening demand and construction activity.
  2. Construction Costs: Builders are always keeping an eye on the cost of materials and labor. If these costs continue to rise, it could put further pressure on housing prices and construction timelines.
  3. Government Policies: Government policies related to zoning, regulations, and incentives can have a big impact on housing construction. For example, streamlining the permitting process can help builders get projects off the ground more quickly.
  4. Tariffs: There have been discussions on tariffs on materials, especially from countries like China and Canada. These tariffs would further increase the cost of construction and decrease production.
  5. Regulatory Reforms: Regulatory reforms can help decrease the cost to builders and therefore help reduce home prices.

My Thoughts

Having followed the housing market for several years, I believe we're at a bit of a turning point. The days of rapid price appreciation and frenzied buying seem to be behind us, at least for now.

Here are a few of my observations:

  • The need for affordable housing is critical. We need innovative solutions to make housing more accessible to a wider range of people. This could include things like smaller homes, accessory dwelling units (ADUs), and more efficient building techniques.
  • Builders need to adapt to changing consumer preferences. Buyers are increasingly interested in energy-efficient homes, smart home technology, and flexible living spaces. Builders who can meet these demands will be better positioned for success.
  • Local governments play a crucial role in shaping the housing market. By streamlining the permitting process, reducing unnecessary regulations, and investing in infrastructure, local governments can create a more favorable environment for housing construction.

Policy Paths: A Call for Action

Given the persistent affordability concerns, reducing inefficient regulatory costs offers the best policy path to improve attainable housing supply and bring down shelter inflation. This requires a collaborative effort from policymakers, builders, and community stakeholders. We have to find creative solutions that address the challenges facing the housing market.

Conclusion:

The new housing construction trends and forecast for 2025 suggest a market that's still finding its footing. While there are challenges, there are also opportunities. By understanding the key trends and factors at play, you can make informed decisions about buying, selling, or investing in real estate. I believe that a balanced approach, combining thoughtful planning with innovative solutions, is essential to navigating the dynamic housing market of 2025 and beyond.

Jumbo Mortgage Rates Drop Today: 30-Year is Currently at 7.01% – August 20, 2025

by

Are you dreaming of buying a luxury home or a property in a high-cost area? Then you're probably looking into jumbo mortgage rates today. According to Zillow, as of August 20, 2025, the average 30-year fixed rate jumbo mortgage is around 7.01%. However, this is just a snapshot in time. The mortgage world is always changing, and I'm here to break down what's happening with jumbo rates, what's driving them, and what you can expect in the near future.

Jumbo Mortgage Rates Drop Today: 30-Year is Currently at 7.01% – August 20, 2025

What Are Jumbo Loans Anyway?

Before diving into the numbers, let's clarify what a jumbo loan actually is. Simply put, it’s a mortgage that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac. These limits vary by location, but generally, if you need to borrow more than the conforming limit for your area, you'll be looking at a jumbo loan. And because these loans aren't backed by those government-sponsored enterprises, they often come with slightly higher interest rates and stricter qualification requirements.

A Quick Look at Current Jumbo Mortgage Rates

Here's a more detailed look at the rates I'm seeing right now (August 20, 2025 – Zillow):

  • 30-Year Fixed Rate Jumbo: 7.01% (down 0.04% from last week) with an APR of 7.33% (down 0.14% from last week)
  • 15-Year Fixed Rate Jumbo: 6.33% (down 0.02% from last week) with an APR of 6.52% (down 0.10% from last week)
  • 7-Year ARM Jumbo: 7.53% (unchanged from last week) with an APR of 7.70% (unchanged from last week)
  • 5-Year ARM Jumbo: 7.28% (up 0.09% from last week) with an APR of 7.92% (up 0.13% from last week)

As you can see, there's a variety of options available, with varying rates. It's interesting to note that the fixed rates are down from last week, while the 5-year ARM has jumped a bit. This highlights the market's sensitivity to economic news and future expectations.

Understanding the Factors Driving Jumbo Mortgage Rates

So, why are jumbo mortgage rates where they are today? Several factors are at play:

  • The Federal Reserve (The Fed): The Fed's monetary policy decisions are a huge influence on mortgage rates. After aggressively raising rates to combat inflation, the Fed is expected to cut rates soon. We'll delve deeper into this soon.
  • Inflation: Even though inflation has cooled down a bit, it's still a concern. If inflation remains stubbornly high, the Fed may be hesitant to cut rates aggressively.
  • The Economy: Overall economic health plays a role. Strong economic growth can lead to higher rates, while a slowing economy can push them down. Right now, we're seeing mixed signals – growth is slowing, but the labor market is still relatively tight.
  • Investor Confidence: The market's overall appetite for risk impacts mortgage-backed securities, which in turn influences mortgage rates.

The Federal Reserve's Role: A Deep Dive

Let's zoom in on the Fed because its actions are the biggest driver of mortgage rate trends. Here's a quick recap of their recent activity:

  • 2021-2023: Rate Hike Frenzy: The Fed hiked the federal funds rate by a whopping 5.25 percentage points to fight inflation. This sent mortgage rates soaring to 20-year highs. I remember how frustrating it was for potential homebuyers at the time!
  • Late 2024: The Pivot: The Fed finally paused rate hikes and even cut rates three times between September and December.
  • 2025: A Year of Waiting: The Fed has held steady on rates for the first half of 2025, creating a lot of uncertainty.

Right now (mid-2025), opinions are divided within the Fed. Some members are pushing for immediate rate cuts to stimulate the slowing economy, while others are hesitant due to persistent inflation.

The Anticipated September Rate Cut: What to Expect

The good news is that most market indicators point to a high probability of a rate cut at the September 16-17 Fed meeting. Currently, models like the CME FedWatch Tool suggest an 85-95% chance of a cut. This is built on the expectation of:

  • Cooling Inflation: The CPI has been moderating, which is a positive sign.
  • Weakening Labor Market: Unemployment has risen, and job growth is slowing, giving the Fed more reason to act.
  • Predicted Slowdown: Economic forecasts are pointing towards a slowdown, increasing the need for stimulus.

Keep an eye on Fed Chair Jerome Powell's speech at the Jackson Hole Economic Symposium on August 22. This could offer further clues about the Fed's intentions.

How a September Rate Cut Could Impact You

If the Fed does cut rates in September, here's what I anticipate:

  • Lower Mortgage Rates: A cut should finally initiate a sustained downward trend in mortgage rates, including jumbo rates.
  • Boost to the Economy: Lower borrowing costs should spur business investment and overall economic activity.
  • Market Movement: Expect activity in both the stock and bond markets.

The Fed itself projected two rate cuts in 2025. A September cut would be the first, potentially bringing mortgage rates closer to 6% by the end of the year. Of course, unexpected economic developments could always change the Fed's plans.

Key Dates and What to Watch For

Here's a timeline of what's coming up:

Date Event Significance
August 22, 2025 Jackson Hole Economic Symposium Fed Chair Powell Speech, potential hints about September decision
September 16-17, 2025 Federal Reserve Meeting Highly anticipated rate cut; updated economic projections will be released
December 2025 Federal Reserve Meeting Opportunity for a second rate cut to complete the projected easing cycle

What This Means for Borrowers Like You

  • Current Homebuyers: While rates are still high, the strong signal for a September cut suggests that relief is on the horizon. Don't give up hope!
  • Refinancers: If you have a mortgage rate above 7%, keep a close eye on the September meeting. This could be the trigger for a new wave of refinancing opportunities.
  • Investors: The bond markets are volatile, especially with the 10-year Treasury yield being sensitive to Fed chatter. A confirmed rate cut would likely push yields lower.

My Final Thoughts

The jumbo mortgage market, like the broader economy, is in a bit of a holding pattern right now. It's a time of watching and waiting. While recent economic data suggests a high probability of a rate cut at the next Fed meeting, there's always room for surprises. If the Fed does cut rates, it could be a great opportunity to jump into the market or consider refinancing an existing mortgage. Of course, it's always best to speak with a qualified mortgage professional to discuss your specific situation and goals.

Capitalize Amid Rising Mortgage Rates

With mortgage rates expected to remain high in 2025, it’s more important than ever to focus on strategic real estate investments that offer stability and passive income.

Norada delivers turnkey rental properties in resilient markets—helping you build steady cash flow and protect your wealth from borrowing cost volatility.

HOT NEW LISTINGS JUST ADDED!

Speak with a seasoned Norada investment counselor today (No Obligation):

(800) 611‑3060

Get Started Now

Mortgage Rates Predictions Next 90 Days: August to October 2025

by

If you're wondering where mortgage rates are headed over the next 90 days, between August and October 2025, the short answer is: expect some stability with a slight downward trend. As of now, August 11, 2025, the average 30-year fixed mortgage rate is around 6.63%. Most experts predict they'll hover in the mid-to-high 6% range for the next few months, possibly dipping a bit lower by October if the economy cools off. It's not a dramatic drop, but every little bit helps!

Now, let's break down what's behind these predictions and what it all means for you, whether you're buying a home, refinancing, or just keeping an eye on the market.

Mortgage Rate Predictions for the Next 90 Days: August to October 2025

The Current Mortgage Rate Picture

Before we look ahead, let's take a snapshot of where we stand right now. As I mentioned, Freddie Mac reported an average 30-year fixed rate of 6.63% on August 7th. The Mortgage Bankers Association (MBA) clocked in a slightly higher rate of 6.77% a few days earlier. Bankrate is showing similar numbers, with the 30-year fixed at 6.75%, the 15-year fixed at 5.99%, and 5/1 ARMs (Adjustable Rate Mortgages) at 6.01%.

Here's a quick summary

  • 30-year fixed (Freddie Mac): 6.63%
  • 30-year fixed (MBA): 6.77%
  • 30-year fixed (Bankrate): 6.75%
  • 15-year fixed (Bankrate): 5.99%
  • 5/1 ARM (Bankrate): 6.01%

What does this mean? We're seeing some stabilization after the higher rates of late 2024. But remember, these are averages. The actual rate you get will depend on your individual credit score, down payment, and the lender you choose.

What's Driving Mortgage Rates? The Key Players

Mortgage rates don't just pop out of thin air. They're heavily influenced by several factors, mainly:

  1. The Federal Reserve (The Fed) and its Policies: What the Fed does has a HUGE impact. They control the federal funds rate, which indirectly influences mortgage rates. The Fed held rates steady at their July meeting, and recent jobs data suggests a potential rate cut later in 2025. This is a big deal because even hints of a potential cut can bring mortgage rates down.
  2. Inflation and Economic Health: Inflation is the enemy of low interest rates. If inflation is high, the Fed is more likely to keep rates high to cool things down. But if inflation is under control and the economy is showing signs of slowing, we might see rates decrease. Remember that core inflation sits at 2.8% year-over-year, inching closer to the Fed's 2% target, so this will be closely monitored.
  3. The Bond Market (The 10-Year Treasury Yield): Mortgage rates are closely tied to the 10-year Treasury yield. If investors are buying bonds, that pushes yields down, which can then lower mortgage rates. I always think of the bond market as a barometer of economic confidence.
  4. Housing Market Conditions (Supply and Demand): If there are more houses than buyers, sellers might budge on price, and lenders might compete for borrowers by offering lower rates. Conversely, a hot market with limited inventory can keep rates elevated.
  5. Global Events & Geopolitics: While domestic data usually has the biggest impact, unexpected global events can throw a wrench into things.

Expert Predictions: Where are Rates Headed in August-October 2025?

Okay, let's get to the predictions. Here's what the experts are saying:

Mortgage Bankers Association (MBA): Anticipates an average of 6.8% for Q3 2025 (July-September) and 6.7% for Q4 2025 (October-December). This suggests a gradual easing, potentially dipping below 6.7% by October if economic weakness persists.

Fannie Mae: Recent revisions project rates reaching 6.4% by the end of 2025, implying a downward trajectory through Q3 and Q4. This is a slight improvement from earlier estimates of 6.5%.

Here are projections from other sources:

  • Money: Expects rates to stick in the mid-6% range throughout 2025, with potential for some decline.
  • MarketWatch: Forecasts August rates averaging between 6.7% and 6.9%.
  • Yahoo Finance: Sees minimal change, ending 2025 at around 6.7%.
  • Broader Industry Sentiment: Suggests mid-6% as the “new normal” for late 2025.

Let's put this into a table for easier reading:

Source Q3 2025 (Jul-Sept) Q4 2025 (Oct-Dec) End of 2025
MBA 6.8% 6.7% 6.7%
Fannie Mae N/A Toward 6.4% 6.4%
Other Analysts (Avg) 6.7-6.9% 6.5-6.8% Mid-6%

Important Note: These are just predictions! Economic conditions can change rapidly.

My Take: A Gradual Cooling

Based on the data and my own experience following the market, I think we're likely looking at a gradual cooling of mortgage rates, not a steep drop. The Fed will be cautious about cutting rates too quickly, especially if inflation shows any signs of rebounding, though I do think cooling inflation and the July Job report have put some pressure on them. Housing Market Supply and Demand will play a roll, and if rates do drop, that might alleviate some of it. I think it's reasonable to expect rates to remain in that 6.4 – 6.8% range through October.

A Look Back: Why Are Rates Where They Are?

To understand where we are going, you sometimes have to understand where we've been. Last year, and the year prior, mortgage rates hit levels we hadn't seen in decades, climbing above 7%. This was due to the Fed aggressively raising interest rates to combat inflation. The current moderation in rates reflects the fact that inflation is starting to ease.

What Does This Mean for You?

Okay, so how does all this affect you?

  • For Homebuyers: A slight dip in rates can make a big difference in your monthly payment. It opens up more properties in your price range and gives you a bit more bargaining power. It also may mean more inventory. If you have been holding off, now may be your time to jump in.
  • For Refinancers: If you locked in a rate above 7% last year, even a small drop to 6.5% can be worth refinancing. It could save you serious money over the life of the loan. Most Experts will recommend refinancing if rates fall 0.5 – 1% below your current rate.
  • For Sellers: Stable rates are good. Lower rates might entice more buyers to enter the market, especially in markets where you know prices are steady amid rate moderation.

Tips for Navigating the Mortgage Market in the Next 90 Days

Alright, here's some actionable advice for the next few months:

  1. Stay Informed: Keep an eye on those weekly reports from Freddie Mac and the MBA. Knowledge is power!
  2. Get Your Financial House in Order: Boost your credit score, pay down debt, and save for a larger down payment. This will help you qualify for the best rates.
  3. Shop Around: Don't just go with the first lender you find. Get quotes from multiple lenders to see who can offer you the best deal.
  4. Consider a Rate Lock: If you're buying soon, a rate lock can protect you from potential rate increases.
  5. Explore ALL Your Options: An ARM or 15-year loan might be a good choice if you need a lower initial rate.
  6. Talk to a Professional: A mortgage broker or financial advisor can give you personalized advice based on your situation. The fee is absolutely worth it!

The Bottom Line

While the data points to a moderation in the market in the coming months, the exact direction of mortgage rates between August and October 2025 is still murky. Expect rates to hover around 6.5-6.8%. By following these expert tips, you'll be well-equipped to navigate the mortgage market and make the best decisions for your future.

Capitalize Amid Rising Mortgage Rates

With mortgage rates expected to remain high in 2025, it’s more important than ever to focus on strategic real estate investments that offer stability and passive income.

Norada delivers turnkey rental properties in resilient markets—helping you build steady cash flow and protect your wealth from borrowing cost volatility.

HOT NEW LISTINGS JUST ADDED!

Speak with a seasoned Norada investment counselor today (No Obligation):

(800) 611‑3060

Get Started Now

Blog Posts

Contact

Norada Real Estate Investments 30251 Golden Lantern, Suite E-261 Laguna Niguel, CA 92677

(949) 218-6668
(800) 611-3060
BBB