Today’s Mortgage Rates – August 4, 2025: Rates Drop Nearly Across the Board

Mortgage rates today, August 4, 2025, have fallen slightly compared to last week, with the national average 30-year fixed mortgage rate dropping to 6.69%, down 13 basis points (0.13%) from 6.82%. Refinancing rates have similarly seen declines, with the 30-year fixed refinance rate dropping to 6.89%. Both mortgage and refinance rates show moderate decreases, offering potential saving opportunities for buyers and homeowners looking to refinance. These subtle rate drops come amid a Fed policy pause, signaling a market cautiously optimistic about easing borrowing costs later this year.

Today's Mortgage Rates August 4, 2025: Rates Go Down Nearly Across the Board

Key Takeaways

• 30-year fixed mortgage rate dropped to 6.69%, down 0.13% from last week.
• 15-year fixed mortgage rate declined to 5.74%.
• 5-year ARM mortgage rate fell to 7.12%.
• 30-year fixed refinance rate decreased to 6.89%.
• Federal Reserve has held interest rates steady for five meetings, signaling a wait-and-see approach.
• Possible Fed interest rate cuts later this year could push mortgage rates lower.
• Economic data shows slower GDP growth and persistent inflation, influencing Fed decisions and mortgage rates.

Current Mortgage Rates Overview: August 4, 2025

Let's look in detail at the mortgage and refinance rates today as reported by Zillow. The data highlight drops in most loan types, with some variability in government-backed loans.

Mortgage Loan Type	Rate (Aug 4)	Change from Last Week	APR	APR Change
30-Year Fixed (Conforming)	6.69%	-0.13%	7.20%	-0.08%
20-Year Fixed (Conforming)	6.34%	-0.12%	6.84%	-0.09%
15-Year Fixed (Conforming)	5.73%	-0.15%	6.07%	-0.11%
10-Year Fixed (Conforming)	5.94%	+0.19%	6.34%	+0.22%
7-Year ARM (Adjustable)	6.88%	-0.35%	7.66%	-0.21%
5-Year ARM	7.07%	-0.48%	7.77%	-0.14%
30-Year Fixed FHA	7.46%	+0.27%	8.50%	+0.26%
30-Year Fixed VA	6.21%	-0.08%	6.44%	-0.06%
15-Year Fixed FHA	5.75%	+0.23%	6.72%	+0.20%
15-Year Fixed VA	5.76%	-0.07%	6.13%	-0.04%

 

Refinance Rates: Lower Across Most Product Types

Refinancing offers a chance for homeowners to reduce monthly payments or shorten loan terms. On August 4, 2025, refi rates broadly dropped, reflecting a slightly easier borrowing environment.

Refinance Loan Type	Rate (Aug 4)	Change from Last Week
30-Year Fixed Refinance	6.89%	-0.06%
15-Year Fixed Refinance	5.66%	-0.12%
5-Year ARM Refinance	7.52%	-0.20%

What Factors Are Driving Mortgage Rate Changes Today?

Understanding why mortgage rates fluctuate helps borrowers and investors gauge the housing market and economy better. Here are the main drivers behind today's rates:

Federal Reserve Monetary Policy:

The Federal Reserve’s actions heavily influence long-term borrowing costs such as mortgages. After aggressive rate hikes from 2022 to mid-2023 to combat inflation, the Fed paused its hikes in 2025, holding the federal funds rate steady at 4.25%-4.5% for five meetings straight. The pause reflects economic uncertainty—slowed GDP growth (~1.2% annualized in H1 2025), rising unemployment (4.5%), and stubborn core inflation (~2.7% PCE).

During this pause, mortgage rates have slightly declined from their 20-year highs near 7%. The market expects possible Fed rate cuts in late 2025, which would likely push mortgage rates closer to 6% by year-end. However, Fed officials remain divided, with some dissenting votes advocating for immediate cuts to support the economy.

Bond Yields:

Mortgage rates are closely tied to the 10-year Treasury yield, which fluctuates based on investor expectations about inflation and Fed policy. Currently, the 10-year yield sits around 4.34%, reflecting investor caution amid mixed economic signals.

Comparing Fixed vs. Adjustable Mortgage Rates

Homebuyers often face the choice between fixed-rate and adjustable-rate mortgages (ARMs). Both have pros and cons depending on one's financial plans and market outlook.

• Fixed-rate mortgages lock in a steady interest rate and monthly payments for the loan term, offering predictability. Today, the 30-year fixed rate averages 6.69%, slightly lower than last week.
• Adjustable-rate mortgages (ARMs) start with lower initial rates but adjust over time based on market indices. The 5-year ARM rate fell to 7.07%, down nearly half a percentage point week over week, making ARMs potentially attractive for short-term borrowers expecting to refinance or sell within a few years.

Example Calculation: How the Rate Drop Impacts Monthly Payments

Consider a $300,000 loan amount on a 30-year fixed mortgage:

Rate	Monthly Payment (Principal + Interest)
6.82% (Last Week)	$1,942
6.69% (Today)	$1,919

Difference: $23 less per month due to 0.13% rate drop

By refinancing or locking in a mortgage now instead of last week, a borrower could save roughly $276 annually just on principal and interest payments.

State of Government-Backed Loans

Government-backed FHA and VA loans often serve first-time homebuyers or those with lower credit scores by offering lower down payment requirements.

• The 30-year FHA fixed rate increased slightly to 7.46%, while VA loan rates fell to 6.21%.
• The mixed movement indicates varied demand and risk perception in these government-backed programs—FHA rates rising slightly might reflect higher insurance costs or credit considerations, whereas VA loans are a bit cheaper this week.

The Federal Reserve’s Role: Deep Dive into 2024-2025 Monetary Policy

The Fed's policy actions remain the prime force shaping mortgage markets:

• From 2021-2023, the Fed's bond buying kept mortgage rates ultra-low.
• From March 2022 to July 2023, aggressive rate hikes lifted rates sharply.
• In late 2024, the Fed started cutting rates, lowering the federal funds rate by 1 percentage point across three cuts.
• In 2025, the Fed paused rate moves for over five meetings despite mixed economic signals.
• Market expectations for additional rate cuts later in 2025 could mean mortgage rates drop further, though timing and magnitude remain uncertain.

This Fed-induced uncertainty, combined with inflation still above target, explains the mild dips in mortgage rates—borrowers benefit from slight relief but face a cautious outlook.

Mortgage Rate Trends and the Economy: Insight from Experts

From my experience following mortgage markets, even small interest rate moves can have outsized impacts on affordability and housing demand. The current mortgage rate dip in early August 2025 is encouraging compared to last year’s highs exceeding 7%, yet the bar remains high relative to historic lows near 3%.

Homebuyers currently must weigh if locking in rates at 6.69% fits their budget and timeline, especially since the housing market adjusts slower than bond yields or Fed moves. For homeowners refinancing, saving 10-20 basis points could lower monthly payments enough to justify upfront refinancing fees.

The Fed’s hesitance to cut rates immediately despite economic weakness highlights a tricky balancing act—too quick a cut could spark inflation again, while waits risk deepening economic slowdowns. Borrowers should keep an eye on the Fed’s September 16-17 meeting, poised to provide new guidance.

Mortgage Rates Today Summary

Mortgage rates as of August 4, 2025, have generally dipped modestly across most loan types and refinancing rates. The 30-year fixed mortgage rate eased to 6.69%, reflecting near-term relief after months of high borrowing costs. Though still elevated compared to historic norms, the drop occurred alongside a Fed interest rate pause and markets betting on future cuts.

Both homebuyers and refinance candidates can watch for upcoming Fed signals and evolving economic data that may tip rates even lower by late 2025 or early 2026. Awareness of exact rates by loan types—including government loans and ARM offers—helps borrowers choose options aligned with their financial goals.