Mortgage Rates Predictions August 2025: Will Rates Go Down?

Trying to time the market, especially when it comes to something as big as a mortgage, can feel like trying to predict the weather. Will it be sunny skies and low rates, or stormy weather and high costs? If you're wondering, “Will mortgage rates drop in August 2025?” the answer is probably not drastically. While a slight dip is possible, most experts believe rates will hover between 6.4% and 6.8%. Let's explore why that is and what factors could shift things one way or the other.

Mortgage Rates Predictions August 2025: Will Rates Go Down?

The Current Situation: Where Mortgage Rates Stand Today

As of late July 2025, things are somewhat steady. Getting a mortgage today means dealing with interest rates that are higher than what we saw a few years ago. The average 30-year fixed-rate mortgage (FRM) is around 6.74%. It’s moved a little bit, but it hasn't made any big jumps lately.

To really get a feel for this, look at the numbers:

• 30-Year FRM: 6.74% (Slightly down from last year)
• 15-Year FRM: 5.87% (A bit better, but you pay more each month)
• Recent Range: Between 6.08% and 7.04% over the past year

While some might call it stable, “stable” at mid-6% can be a challenge for a lot of people who are trying to buy a home. This makes it tricky. I remember helping my cousin buy his first house in 2021 when the rates were crazy low. He got a steal. Now, it’s a whole different ball game, and that’s why understanding future predictions is important.

Looking Back: A Quick History of Mortgage Rate Swings

Why are rates where they are today? To understand that, we need to take a little trip down memory lane.

• 2020-2021: The Pandemic Plunge. When COVID-19 hit, the Federal Reserve stepped in and cut interest rates to near-zero. Mortgage rates followed suit, dropping to historical lows. It’s like they were practically giving money away! I remember thinking I should refinance just because, even though I had only bought my house a year before.
• 2022-2023: The Inflation Surge. Inflation started to climb when the world opened up, and the Fed started raising rates to calm things down. Mortgage rates shot up, too.
• 2024: Trying to Find Balance. Rates bouncing around, usually between 6% and 7% reflecting the back and forth between inflation and economic expansion.
• 2025: High But Steady. We're kind of stuck in the high-6% range without any dramatic drops.

This rollercoaster shows us it is not child's play, and there is no definite answer. This is why predictions should be seen as educated guesses, not guarantees.

Expert Expectations: What the Forecasters Are Saying About August 2025

Alright, let’s dive into what the people who study this stuff for a living are saying. I've scoured reports from the big names – NAR, Realtor.com, Fannie Mae, MBA, and Freddie Mac – to give you the most comprehensive outlook.

Here’s a quick rundown:

• National Association of Realtors (NAR): Their chief economist, Lawrence Yun, thinks rates will average around 6.4% in the second half of 2025. He thinks inflation will calm down, and because of that, house sales should rise.
• Realtor.com: They think we'll be at 6.4% by the end of 2025. August 2025 numbers will probably be around 6.5%-6.7%, so not a huge change.
• Fannie Mae: They're predicting rates will end 2025 at 6.5% and then drop a bit more in 2026. For the summer, it looks like they're seeing rates around 6.6%.
• Mortgage Bankers Association (MBA): This group is playing it a bit safe. They think rates will stay close to 6.8% and then drop down to 6.7% by the end of the year.
• Freddie Mac: They think rates are going to be up for a while, but slightly below what they were the prior year.
• Morgan Stanley: Their economists believe that if the U.S. Treasury yields were to decrease, then this would also affect the interest rates.

To help you picture it all, take a look at this summary:

Source	Q3 2025 (Aug) Forecast	Year-End 2025 Forecast	2026 Forecast
NAR	~6.4%	6.4%	6.1%
Realtor.com	~6.5%-6.7%	6.4%	–
Fannie Mae	6.6%	6.5%	6.1%
MBA	6.8%	6.7%	6.3%
Freddie Mac	~6.5%-6.7%	~6.5%	–
Morgan Stanley	~6.5%-6.8%	–	Lower

The Bottom Line: Most experts seem to agree that mortgage rates in August 2025 will likely be in the 6.4% to 6.8% range. Don't expect any huge drops anytime soon. It looks like the bigger changes will happen later, maybe in 2026 or 2027.

What's Driving Rates? The Economic Factors at Play

Okay, so we know what the experts think, but why do they think that? Let's look at the main things that push mortgage rates up or down.

1. The Federal Reserve (The Fed): The Fed controls the federal funds rate, which affects everything else, including mortgage rates. They've put the brakes on rate hikes due to inflation. It looks like if things cool down, they will lower rates.
2. Inflation, Inflation, Inflation: The Fed really wants to get inflation down to 2%. If inflation drops faster than people expect, rates could slide down a bit. But, if something happens to push inflation up again (and there always could be), rates might stay higher.
3. Treasury Yields: Mortgage rates like to follow the 10-year Treasury note yield.
4. Economic Growth: A strong economy can mean higher rates.
5. The Housing Market Itself: Are there a lot of houses for sale, or are people holding on to theirs? Are there a lot of buyers, or are people waiting? Low inventory has been pushing prices up, which can indirectly affect rates.

August 2025: Rate Scenarios and What They Mean

So, what could cause rates actually to go down in August 2025? Let's look at a few possibilities:

• The Optimistic View (Rates Drop to Around 6.4%-6.5%) This happens if inflation eases faster than expected, encouraging the Fed to cut rates. Treasury yields would also need to come down as well.
  • What it Means: It would be a little easier to buy a home. For example, on a \$1 million house, if rates dropped from 6.74% to 6.4%, your monthly payment would decrease by a couple of hundred dollars.
  • How Likely? Possible, but inflation is still pretty sticky.
• The Status Quo (Rates Stay Around 6.5%-6.7%) This is what most experts expect. Inflation hangs around and the Fed does nothing.
  • What it Means: Things would keep moving how they're probably moving now. Not cheap, but not getting worse either.
  • How Likely? Very likely, considering how things are playing out.
• The Worrisome View (Rates Go Above 7%) This might happen if something causes inflation to jump up again. If that happened, the Fed might even have to raise rates again.
  • What it Means: Owning a home would get even harder, and sales would likely drop.
  • How Likely? Not likely, but always on the cards.

What This Means for You: Whether You're Buying or Already Own

• For Homebuyers: It might not be worth waiting for a massive rate drop. While trying to predict the market can be enticing, sometimes its best to jump in.
• For Homeowners: Should you refinance? Look at your current situation. If rates slide down a bit, and you can reduce your rate by 0.5% to 1%, it could be worth it.

Here's how monthly mortgage payments change with different interest rates:

The Big Picture: What the Housing Market Will Look Like in August 2025

Here's what the overall market might look like then:

• More Sales: Overall, it seems like sales will climb, likely a slow pace, but still moving in the right direction.
• Prices Calming Down: Don't expect another big spike in prices. It seems prices are beginning to normalize.
• More Choices: It may become easier to find inventory as developers get rid of “rate lock.”
• Sticking Points: Buying a home may still be unaffordable to most.

The Final Word: Patience and Planning Are Key

So, will mortgage rates drop in August 2025? The short answer is probably not by much. Expect rates to stay in the mid-6% range. Major changes may take even longer. Be patient, plan carefully, and don't try to predict impossible outcomes. Keep an eye on the news. Consult with a mortgage professional.