Today’s Mortgage Rates – October 4, 2025: 30-Year FRM Drops Significantly by 37 Basis Points

On October 4, 2025, mortgage rates dropped notably, with the average 30-year fixed mortgage rate falling to 6.22%, down 37 basis points from last week’s 6.59%, according to Zillow. This marks a significant relief for new homebuyers seeking affordable financing. However, refinance rates have increased, with the 30-year fixed refinance rate climbing up to 7.13%, indicating that homeowners looking to refinance might face higher costs. This divergence presents an interesting dynamic in the mortgage market right now.

Today's Mortgage Rates – October 4, 2025: 30-Year FRM Drops Significantly by 37 Basis Points

Key Takeaways

• 30-year fixed mortgage rate fell to 6.22%, down 0.37% from last week.
• 15-year fixed mortgage rate dropped to 5.56%, a decrease of 9 basis points.
• 5-year ARM mortgage rate holds steady at 7.10%.
• Refinance rates increased: 30-year fixed refinance rate rose to 7.13%, up 15 basis points.
• Federal Reserve's recent rate cut contributes to potential for gradual mortgage rate declines but refinance rates remain elevated.
• Mortgage-Treasury spreads remain wide, limiting bigger drops in mortgage rates.
• Forecasters expect mortgage rates to average around 6.4% through late 2025 with possible dips below 6% in 2026.

Current Mortgage Rates Snapshot – October 4, 2025

Loan Type	Rate	Week Change	APR	APR Change
30-Year Fixed	6.22%	-0.37%	6.75%	-0.31%
20-Year Fixed	6.34%	-0.02%	6.46%	-0.18%
15-Year Fixed	5.56%	-0.09%	5.92%	-0.15%
10-Year Fixed	5.84%	0.00%	6.23%	0.00%
7-Year ARM	7.27%	-0.01%	7.44%	-0.29%
5-Year ARM	7.10%	-0.04%	7.72%	-0.08%

Government-backed loans also show varied trends:

Loan Type	Rate	Week Change	APR	APR Change
30-Year Fixed FHA	7.63%	+1.82%	8.68%	+1.87%
30-Year Fixed VA	5.89%	-0.18%	6.02%	-0.20%
15-Year Fixed FHA	5.31%	-0.01%	6.27%	-0.01%
15-Year Fixed VA	5.69%	-0.17%	6.05%	-0.08%

Refinance Rates on October 4, 2025

While mortgage rates for home buyers showed encouraging declines, refinancing costs have climbed recently:

Loan Type	Rate	Week Change
30-Year Fixed Refinance	7.13%	+0.15%
15-Year Fixed Refinance	6.10%	+0.30%
5-Year ARM Refinance	7.41%	+0.02%

This increase in refinance rates suggests that homeowners looking to lower their payments or shorten loan terms might face less favorable conditions compared to new homebuyers locking in fresh mortgages.

Understanding the Drop in Mortgage Rates Amid Rising Refinance Rates

The drop in standard mortgage rates to around 6.22% follows a notable cut by the Federal Reserve on September 17, 2025. The Fed lowered its benchmark interest rate for the first time in 2025, trimming it by 0.25% to a range of 4.0%–4.25%. This move was aimed at lowering borrowing costs to stimulate growth amid persistent inflation that still sits above the Fed’s 2% target.

Mortgage rates typically move in tandem with the 10-year U.S. Treasury yield, which dropped slightly to 4.12% by October 1, 2025. Since mortgage lenders price their loans partly off Treasury bonds, this drop helps reduce mortgage interest rates.

However, the spread between mortgage rates and Treasury yields has widened beyond the usual 1-2 percentage points, making mortgages more expensive than the Treasury yield alone would suggest. This spread represents risks lenders take, including loan defaults and market volatility, that haven't yet eased fully. Hence, the mortgage rate drop is somewhat moderated.

On the other hand, refinancing rates are higher because refinancing involves different risk profiles and the current market conditions have lenders pricing in risks more aggressively. The spread on refinance loans often reflects current economic uncertainty and changes in investor demand.

Mortgage Rate Forecasts: What Experts Say

Experts mostly agree that mortgage rates will stay somewhat elevated for the rest of 2025 but could ease gradually going into 2026.

• The National Association of REALTORS® expects mortgage rates to average about 6.4% in the second half of 2025 and fall further to around 6.1% in 2026, which would ease affordability challenges somewhat.
• Fannie Mae’s September 2025 forecast projects mortgage rates ending 2025 at 6.4%, easing to 5.9% in 2026. They also expect refinancing activity to increase as rates dip, with a greater share of mortgage originations being refinance loans in 2026 compared to 2025.
• The Mortgage Bankers Association expects rates to decline slightly, forecasting 6.7% by the end of 2025 and dropping to 6.5% by the close of 2026 but also noted wide mortgage-Treasury spreads and volatility could keep borrowing costs elevated periodically.

Example Calculation of Monthly Payment Change

To see the impact of these rate changes, let's calculate the monthly principal and interest payment difference on a $300,000 loan amount at the old and new 30-year fixed mortgage rates.

Rate	Monthly Principal & Interest	Total Interest Paid Over 30 Years
6.59% (last week)	$1,912.00	$388,512
6.22% (today)	$1,835.00	$360,600

At 6.59%, the monthly payment is about $77 more per month compared to today's rate of 6.22%. Over 30 years, that difference adds up to about $27,912 saved in interest alone by locking in the lower rate.

Why Are Mortgage and Refinance Rates Moving in Opposite Directions?

This divergence signals different borrower profiles and market forces at play:

• Purchasers locking in mortgage loans can benefit immediately from the Fed’s rate cut and treasury yield drop, leading to lower average mortgage rates now.
• Refinancers, however, face market caution; lenders price in risk differently since refinancing often involves borrowers with varying credit quality or changed financial situations. Also, refinancing volume has increased somewhat in 2025 compared to 2024, but lenders remain cautious about further declines due to inflation concerns and economic uncertainty. This keeps refinance rates higher.

What the Federal Reserve’s Rate Cut Means for Mortgage Markets

The Fed’s move to lower its benchmark rate is seen as an easing measure after a period of tightening monetary policy intended to curb inflation. While this helps lower borrowing costs indirectly, the full effect on mortgage rates depends heavily on investor sentiment and inflation trends.

• The Fed’s preferred inflation measure, the core PCE price index, rose 2.9% year-over-year in August 2025, well above the ideal 2%, keeping inflation concerns alive.
• Economic growth remains solid; real GDP grew at 3.8% annualized rate in Q2 2025.

Because of these mixed signals, mortgage rates aren’t dropping dramatically, as the Fed must balance supporting growth without letting inflation flare up.

Long-Term View: The Housing Market and Affordability

Lower mortgage rates improve affordability by reducing monthly payments and total interest costs. Yet, the sticky inflation and wide risk premiums prevent rates from returning to the historically low levels we saw earlier this decade. This means:

• Buyers with strong credit might still find good opportunities to lock lower fixed rates compared to just weeks ago.
• Sellers might see slightly more inventory as homeowners who were waiting for rates to drop start listing their homes.
• Refinancing opportunities exist but come at a higher cost for many borrowers as refinance rates remain elevated.

Summary

Today's mortgage landscape on October 4, 2025, offers a mix of hope and caution. The big drop in 30-year fixed mortgage rates to 6.22% provides relief to homebuyers, signaling a better borrowing environment than recent weeks. In contrast, refinancing rates are rising, reflecting lenders' cautious stance amid inflation and market risk concerns.

The Federal Reserve's recent interest rate cut and falling Treasury yields contribute to these trends but with a widened spread preventing deeper declines in mortgage borrowing costs. Experts agree that mortgage rates will hover in the mid-6% range through 2025, possibly dipping below 6% by 2026, but with volatility likely to remain.

For borrowers, knowing these dynamics is crucial when shopping for a mortgage or refinancing. The current environment rewards quick action and careful rate comparison, with lower fixed rates available for new loans but more expensive refinancing options for some.