Today’s Mortgage Rates – August 27, 2025: Rates Drop Overall Across the Spectrum

Mortgage rates today on August 27, 2025, have fallen slightly across the board, with the national average 30-year fixed mortgage rate dipping to 6.59%—down 8 basis points from last week’s 6.67% (source: Zillow). This small but notable decline is mirrored in 15-year fixed and 5-year ARM rates as well. Refinance rates have also dropped, with the 30-year fixed refinance rate down to 6.75%, marking a 13 basis-point decrease from the previous week. These trends reflect growing market expectations of a Federal Reserve interest rate cut in September, which could bring further reductions in mortgage borrowing costs.

Today's Mortgage Rates – August 27, 2025: Rates Drop Overall Across the Spectrum

Key Takeaways

• 30-year fixed mortgage rates today average 6.59%, down from 6.67% last week (Zillow).
• 15-year fixed rates dropped to 5.65%, and 5-year ARM rates decreased to 6.74%.
• 30-year fixed refinance rates fell to 6.75%, a big 13 basis-point drop week over week.
• Federal Reserve widely anticipated to cut interest rates in September 2025, likely lowering mortgage rates further.
• Experts expect rates to stay above 6% through 2025, with forecasts predicting a gradual decline toward 6.1%-6.4% into 2026.
• Government loan rates show mixed moves—VA loans trending lower; FHA loans slightly higher.

Current Mortgage Rates: An In-Depth Look

Let’s review today's mortgage rates by loan type (Zillow, August 27, 2025):

Loan Type	Rate	1-Week Change	APR	1-Week Change
30-Year Fixed Rate	6.59%	Down 0.08%	7.08%	Down 0.03%
20-Year Fixed Rate	6.43%	No Change	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%	No Change	6.09%	No Change
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%

Government loans show some variation:

Loan Type	Rate	1-Week Change	APR	1-Week Change
30-Year Fixed FHA	6.75%	Up 0.73%	7.78%	Up 0.75%
30-Year Fixed VA	5.91%	Down 0.30%	5.99%	Down 0.43%
15-Year Fixed FHA	5.25%	Down 0.30%	6.21%	Down 0.30%
15-Year Fixed VA	5.54%	Down 0.30%	5.68%	Down 0.52%

Refinance Rates: Big Drops Signal Opportunity

Refinance borrowers saw significant rate decreases this week (Zillow, August 27, 2025):

Refinance Loan Type	Rate	1-Week Change	APR	1-Week Change
30-Year Fixed Refinance	6.75%	Down 0.11%	N/A	N/A
15-Year Fixed Refinance	5.70%	Up 0.03%	N/A	N/A
5-Year ARM Refinance	7.27%	Down 0.14%	N/A	N/A

This marked drop in refinance rates is driven by expectations of an upcoming Federal Reserve rate cut, making refinancing more appealing for homeowners who locked in higher rates last year.

Why Are Mortgage Rates Falling? The Fed Factor

Mortgage rates largely move in sync with the broader interest rate environment influenced by the Federal Reserve’s monetary policy. Here’s what’s driving today’s rates downward:

• Weak Job Growth: Economic reports in early August showed slowing employment gains, signaling a cooling labor market. This reduces pressure on the Fed to keep rates high to curb inflation.
• Sticky But Moderating Inflation: Inflation data indicated prices rising slower than expected, easing urgency for aggressive rate hikes.
• Fed Rate Cut Expectations: The CME FedWatch Tool now shows an 89-91% probability of the Fed cutting the federal funds rate by 25 basis points in their upcoming September meeting. Such a move usually leads to lower mortgage rates.

The Federal Reserve’s recent rate history and outlook is critical to understanding today’s mortgage numbers:

• From 2021 through mid-2023, the Fed raised rates sharply to fight inflation, lifting mortgage rates into the 6.6%-6.8% range seen for much of 2025.
• After a long plateau in 2025, the market identifies a significant chance for cuts beginning in September to spur the economy as growth slows.
• This anticipated “pivot” is expected to bring mortgage rates down gradually, possibly dipping below 6% by late 2026, based on Fannie Mae and Realtor.com forecasts.

Mortgage Rate Forecasts for the Rest of 2025 and Beyond

Different reputable organizations offer varying but broadly consistent forecasts for mortgage rates in the near term:

Source	2025 Year-End Forecast	2026 Forecast	Notes
Fannie Mae (Aug 2025)	~6.5%	~6.1%	Modest upward revision from July; origination increases expected
Realtor.com	~6.4%	Not specified	Anticipates steady easing
Mortgage Bankers Assoc.	6.7%	~6.3%	Rate holding steady, mid-6% range due to inflation worries
National Assoc. of REALTORS®	6.4%	6.1%	Emphasizes rates as a “magic bullet” impacting affordability

While the consensus points to rates staying above 6% this year, markets are watching closely for signs the Fed’s September rate cut will trigger a more significant drop. This aligns with the expectation that mortgage rates are unlikely to return to the historic lows of early 2020 but may slowly ease toward more affordable levels in 2026.

Understanding How These Rates Impact Borrowers: Example Calculations

To clarify the impact of these rate changes, here’s a comparison of monthly payments on a $300,000 mortgage for two scenarios:

Loan Term & Rate	Monthly Principal & Interest	Total Interest Over 30 Years
30-Year Fixed at 6.67% (Last Week)	$1,936	$395,616
30-Year Fixed at 6.59% (Today)	$1,914	$389,040

Difference: $22 per month less, saving $6,576 in interest across the life of the loan, just from an 8 basis point rate drop.

If the Fed cuts rates as expected in September and mortgage rates fall closer to 6%, monthly payments could drop even more substantially — a meaningful impact for homebuyers and those considering refinancing.

Longer-Term Outlook: Federal Reserve’s Strategy and Inflation Impact

The Fed’s monetary policy plays a decisive role in shaping mortgage rates. After hiking aggressively to tackle inflation, the Fed paused in 2025 due to signs of economic slowdown and persistent inflation near 2.7%. The Fed's next moves:

• September 2025: Likely rate cut of 0.25% to support the cooling economy.
• December 2025: Possible additional cut to continue easing financial conditions.
• 2026: Gradual approach to rate cuts with a longer-term target for the federal funds rate near 2.25%-2.5%.

This path reflects balancing growth slowdown concerns with inflation risks. How inflation behaves will be a key factor influencing mortgage rates beyond 2025.

Final Thoughts on Mortgage Rates Today

Mortgage rates today are inching downward, influenced by labor market softness and inflation data that point toward a Federal Reserve interest rate cut in September. For borrowers, these small declines already translate into meaningful savings on monthly payments, with further decreases expected if the Fed follow through.

Despite these promising signs, most forecasts agree rates will remain above 6% through 2025, only gradually falling to more borrower-friendly levels in 2026. This marks a shift from the historic low-rate environment of recent years, requiring borrowers and investors alike to carefully monitor economic data and Fed actions in the coming months.