Mortgage Rates Plummet August 27, 2025: Big Drop in Fixed Rates, Refinance Rates, Current ARMs

If you've been watching mortgage rates like a hawk, waiting for the right moment to buy or refinance, you're in luck! As of August 27, 2025, we're seeing a significant drop in mortgage rates across the board. National 30-year fixed mortgage rates are down to 6.59%, marking a notable shift compared to recent weeks. This decline affects not only fixed rates but also refinance rates and Adjustable-Rate Mortgages (ARMs), making it potentially a great time to reconsider your options.

I know, I know – the mortgage market can feel like a rollercoaster. For most of 2025, rates have been stubbornly stuck between 6.6% and 6.8%. But these recent changes could signal a real shift, and that’s something worth diving into.

Mortgage Rates Plummet August 27, 2025: Big Drop in Fixed Rates, Refinance Rates, Current ARMs

What's Causing This Dip in Mortgage Rates?

The fall in mortgage rates isn't happening in a vacuum. It is a result of a couple of key interconnected factors.

• Weak Job Growth: Recent hiring data released early in August revealed surprisingly weak job growth numbers. This suggests the economy might be cooling off.
• Inflation Concerns, But Not as Bad as Feared: While inflation remains a concern, July's data showed inflation was still sticky, but below economist’s expectations.
• Federal Reserve Anticipation: Most importantly, these two items have led traders to strongly believe the Federal Reserve will cut interest rates by 25 basis points next month, with estimates from the CME FedWatch tool reporting an 89% chance of a rate cut in September. A 91% chance of the Fed dropping interest rates by 25 basis points next month was speculated. That's huge! This anticipation alone is putting downward pressure on mortgage rates NOW.

A Closer Look at Today's Mortgage Rates (August 27, 2025)

Let's break down exactly what's happening with different types of mortgage rates. Here's a comparison of current rates versus last week, based on Zillow's report:

Conforming Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.59%	down 0.08%	7.08%	down 0.03%
20-Year Fixed Rate	6.43%	0.00%	6.94%	up 0.03%
15-Year Fixed Rate	5.65%	down 0.12%	5.98%	down 0.08%
10-Year Fixed Rate	5.79%	0.00%	6.09%	0.00%
7-year ARM	6.63%	down 0.57%	7.59%	down 0.16%
5-year ARM	6.74%	down 0.39%	7.53%	down 0.20%
3-year ARM	—	0.00%	—	0.00%

Government Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate FHA	6.75%	up 0.73%	7.78%	up 0.75%
30-Year Fixed Rate VA	5.91%	down 0.30%	5.99%	down 0.43%
15-Year Fixed Rate FHA	5.25%	down 0.30%	6.21%	down 0.30%
15-Year Fixed Rate VA	5.54%	down 0.30%	5.68%	down 0.52%

Refinance Rates See a Plunge Too!

Refinancing your mortgage can be a great way to save money each month, and the dip in rates definitely makes it worth considering. National 30-year fixed refinance rates are down to 6.75%, a noticeable decrease.

What About the Future? Mortgage Rate Forecasts for Late 2025 and Beyond

No one has a crystal ball, but leading experts are constantly analyzing the market to make informed predictions. Here's what some of the big players are saying:

• National Association of REALTORS®: Expects mortgage rates to average 6.4% in the second half of 2025 and potentially dip to 6.1% in 2026.
• Realtor.com: Predicts a gradual easing of rates to around 6.4% by the end of the year.
• Fannie Mae: Anticipates mortgage rates will end 2025 at 6.5 percent and 2026 at 6.1 percent. They also expect a rise in mortgage originations to $1.85 trillion in 2025 and $2.26 trillion in 2026.
• Mortgage Bankers Association: Foresees rates remaining mostly unchanged near 6.8% through September 2025, and then settling in the mid-6% range (6.4%-6.6%) for the rest of the year.

My Take: Don't Try to Time the Market Perfectly

While this news is encouraging, remember that trying to perfectly time the market is almost impossible. A lot of people expected mortgage rates to fall over the last year, but the opposite happened. Buy a house or refinance when it makes the most sense for your individual financial situation. Don't get caught up in trying to chase the absolute lowest rate. Focus on affordability and long-term financial stability.

The Federal Reserve's Role: The Real Power Behind the Curtain

The Federal Reserve (also called simply, the Fed) remains the main driver of mortgage rates through its monetary policies. It is worth knowing how they function:

• Pandemic Recovery to Rate Hike Cycle (2021-2023): The Fed’s bond purchases kept mortgage rates historically low until late 2021. Then to combat inflation, the Fed aggressively increased the federal funds rate, pushing mortgages to 20-year highs.
• The Pivot to Cuts (Late 2024): After holding rates steady for 14 months, the Fed cut rates three times in late 2024 (September to December), reducing the federal funds rate by 1 percentage point to 4.25%-4.5%.
• 2025: A Year of Waiting and Anticipation: Through July 30, 2025, the Fed held rates steady for five consecutive meetings. Growing economic headwinds suggest a high probability of a September cut. This is based on cooling inflation, weakening labor market, and predicted slowdowns.

Of all the forecasts, the most crucial one is Fed Chair Jerome Powell's speech at the Jackson Hole Economic Symposium on August 22. While he continues to emphasize data dependency, his tone will be scrutinized for confirmation of the market's overwhelming expectation. The bottom line is: all eyes will be on Fed Chair Jerome Powell's upcoming speech at the Jackson Hole Economic Symposium on August 22 for any final hints on the Fed's September decision.

So, What Does This All Mean For You?

• Current Homebuyers: This dip provides some relief, but don't expect rates to plummet overnight. Focus on finding a home you love and a mortgage you can comfortably afford.
• Potential Refinancers: If your current mortgage rate is significantly higher than these new rates, now is the time to seriously explore refinancing. Do the math and see if it makes sense for your long-term financial goals.
• The September Fed Watch: Closely monitor the September meeting that could signal a new wave of refinancing opportunities. Unexpected persistence in inflation or surprising economic strength between now and September could still alter the committee's calculus.

In Closing

The recent drop in mortgage rates is definitely welcome news for anyone in the market to buy or refinance. If the market continues to stay in this range, it signals we could be looking at lower rates by the end of the year.