Will Interest Rates Go Down in August? | Predictions 2025

Mortgage rate forecast for next week (Aug 4-8)

In a bit of good news for house hunters, mortgage rates ticked down for the second straight week.

The average 30-year fixed rate mortgage (FRM) dipped to 6.72% on July 31 from 6.74% on July 24, according to Freddie Mac. That marks 28 consecutive weeks below 7% for the average 30-year FRM.

“Mortgage rates continue to fluctuate with daily economic news, yet they’ve remained largely confined within the 6%-7% range over the past year. This persistent range reflects an ongoing tug of war: signals of a gradually cooling economy put downward pressure on rates, while stubborn inflation keeps them elevated,” said Kara Ng, senior economist at Zillow Home Loans.

Though lagging, the most recent weekly mortgage applications showed a seasonally adjusted 3.8% decrease for the seven days ending July 25, according to the Mortgage Bankers Association.

“Mortgage applications fell to their lowest level since May, with both purchase and refinance activity
declining over the week. There is still plenty of uncertainty surrounding the economy and job market,
which is weighing on prospective homebuyers’ decisions,” said Joel Kan, deputy chief economist at the MBA.

In this article (Skip to...)

• Will rates go down in August?
• 90-day forecast
• Expert rate predictions
• Mortgage rate trends
• Rates by loan type
• Mortgage strategies for August
• Mortgage rates FAQ

Will mortgage rates go down in August?

“Our revised housing forecast anticipates that rates will fall into the 6.4% range by the end of the year, and I expect we’ll see some progress toward that point in August.”

-Danielle Hale, chief economist at Realtor.com

Mortgage rates fluctuated significantly in 2023, with the average 30-year fixed rate going as low as 6.09% and as high as 7.79%, according to Freddie Mac. That range narrowed in 2024, spreading from 6.08% to 7.22%.

With the economy probably heading into a recession, we may have already seen the peak of this rate cycle. But if inflation rises, mortgage rates could uptrend. Of course, interest rates are driven by many factors and notoriously volatile, so they could change direction any given week.

Experts from Realtor.com, First American, and others weigh in on whether 30-year mortgage rates will climb, fall, or level off in August.

Expert mortgage rate predictions for August

Ralph DiBugnara, president at Home Qualified

Prediction: Rates will moderate

“July’s Fed meeting will most likely show us more of the same strategy we have seen this year. Which is hold interest rates and no raise or cut. The Fed Chairman seems to want to see a significant drop in inflation before he agrees to cut. But there is a chance he can reverse course slowly to a cutting strategy because of the immense amount of pressure he is receiving. Not only is the President calling for a cut but the world economy has seen multiple countries cut rates over 2025. Home sales have been seasonally up, which means consumer spending could rise. All these factors seem to signal the same rates we have been experiencing over the last 90 days.” If he does cut, I do not think it will be fast and probably will bleed over into 2026.”

Danielle Hale, chief economist at Realtor.com

Prediction: Rates will decline

“I expect the main factor driving mortgage rates in August will be inflation and inflation expectations. To the extent that the July inflation data released mid-August shows a reversal of some of the acceleration observed in the June data, that could help nudge rates lower. At the same time, progress on trade policy that results in actual or expected reductions in tariff rates is also likely to move rates lower.

“Weaker economic data would also tend to cause lower rates while stronger economic data would cause steady to higher rates. I expect that we’ll see ongoing, moderating economic growth that won’t be a major factor for the rate trajectory in August. I also expect enough improvement in inflation to put mortgage rates back on a gradual downward trend. Our revised housing forecast anticipates that rates will fall into the 6.4% range by the end of the year, and I expect we’ll see some progress toward that point in August.”

Selma Hepp, chief economist at Cotality

Prediction: Rates will moderate

“In the absence of political sway, inconsistent data on the slowing of employment and insufficient data on the tariff impacts, will both keep the Fed from cutting in the upcoming meeting. However, with growing divergence of Committee opinions and growing evidence of a slowing economy, the Fed will tilt closer to a rate cut in September. Nevertheless, with home buying remaining weak and demand for newly built homes under growing pressure, along with the need for incentives, it is unclear how much support the housing market will receive as a result. And even though there are policy discussions around the removal of capital gains to boost housing inventory, many markets with already surging availability of homes for sale continue to suffer from a lack of buyers and affordability issues - problems that eliminating capital gains is unlikely to solve.”

Marc Halpern, CEO at Foundation Mortgage

Prediction: Rates will moderate

“While the Fed is predictably keeping interest rates steady, it’s essential to consider that this week is one of the most consequential weeks when it comes to the future of the nation’s economy. All eyes are on several key jobs and consumer confidence reports, which are also being released this week. American households are watching closely and playing it safe by avoiding large purchases, which is why home sales remain sluggish. Once the consumer confidence numbers begin to increase, so will the desire to buy a home.”

Tony Julianelle, CEO at Atlas Real Estate

Prediction: Rates will moderate

“Mortgage rates will likely remain range-bound this month, hovering near current levels as the market digests mixed signals. Inflation is proving stickier than expected, especially with new tariffs adding upward pressure, but we’re also seeing early signs of softening in the labor market and consumer demand. That tension is keeping mortgage rates in a holding pattern. Unless we get a material shift in inflation or employment data, I don’t expect a major move, but the bias is gradually tilting downward as rate cut expectations build for later in the year.”

Matt Pettit, president at Mountain West Financial

Prediction: Rates will moderate

“The home lending industry remains optimistic of a rate cut this year, but it looks to be some time before the Federal Reserve enacts an interest rate cut decision. New home starts and sales will continue to dwindle until lending prices come down for mortgage companies. That said, the pressure to see an improvement in home sales is continuing to grow, without the benefit of the Fed lowering interest rates. There may be additional housing policies on the way to try to spur more home sales.”

Sam Williamson, senior economist at First American

Prediction: Rates will moderate

“Mortgage rates are expected to remain in the upper 6% range in August, as the Federal Reserve is likely to hold off on rate cuts at its July meeting amid persistent inflation and new tariff-driven price pressures. Although the Fed has signaled two potential cuts by year-end, policymakers remain cautious and data dependent, especially with inflation reaccelerating in June. These inflationary pressures, combined with concerns over the rising budget deficit, have pushed up yields on 10-year Treasury bonds, which mortgage rates loosely follow.

“Without meaningful signs of disinflation, yields are unlikely to ease, keeping mortgage rates elevated. However, if inflation cools and job growth holds steady or moderates, the Fed is expected to cut rates in September, which could lead to a modest decline in mortgage rates heading into the fall.”

Kelly Zitlow, EVP of Sales and Marketing, at Cornerstone Capital Bank

Prediction: Rates will moderate

“We saw that the Fed’s still in a cautious, wait-and-see stance. They’ve been leery about inflation, what’s going to happen with the trade tariff negotiations, and then the employment dynamics — which I don’t think have been as strong with some of the lookbacks having been revised. Policymakers are talking about maybe a quarter cut in July. But turmoil in the Middle East, in conjunction with tariffs, just leads to a lot of unknowns.”

Mortgage interest rates forecast next 90 days

As inflation ran rampant in 2022, the Federal Reserve took action to bring it down and that led to the average 30-year fixed-rate mortgage spiking in 2023.

With inflation gradually cooling, the Fed made three rate cuts in 2024 (September, November, and December). Heading into 2025, many experts believed mortgage interest rates would gradually descend.

Of course, rates could rise on any given week or if another global event causes widespread uncertainty in the economy.

Mortgage rate predictions for 2025

The 30-year fixed-rate mortgage averaged 6.74% as of July 24, according to Freddie Mac. Three of the five major housing authorities we looked at predict 2025’s third quarter average to finish below that.

National Association of Realtors sits at the low end of the group, projecting the average 30-year fixed interest rate to settle at 6.4% for Q3. Meanwhile, the Mortgage Bankers Association had the highest forecast of 6.8%.

Current mortgage interest rate trends

Mortgage rates ticked down for the second consecutive week to end the month on a good note for borrowers.

The average 30-year fixed rate decreased to 6.72% on July 31 from 6.74% on July 24. The average 15-year fixed mortgage rate also declined, going to 5.85% from 5.87%.

Source: Freddie Mac

After hitting record-low territory in 2020 and 2021, mortgage rates climbed to a 23-year high in 2023 before descending somewhat in 2024. Many experts and industry authorities believe they will follow a downward trajectory into 2025. Whatever happens, interest rates are still below historical averages.

Dating back to April 1971, the fixed 30-year interest rate averaged around 7.8%, according to Freddie Mac. So if you haven’t locked a rate yet, don’t lose too much sleep over it. You can still get a good deal, historically speaking — especially if you’re a borrower with strong credit.

Just make sure you shop around to find the best lender and lowest rate for your unique situation.

Mortgage rate trends by loan type

Many mortgage shoppers don’t realize there are different types of rates in today’s mortgage market. But this knowledge can help home buyers and refinancing households find the best value for their situation.

Which mortgage loan is best?

The best mortgage for you depends on your financial situation and your goals.

For instance, if you want to buy a high-priced home and you have great credit, a jumbo loan is your best bet. Jumbo mortgages allow loan amounts above conforming loan limits, which max out at $ in most parts of the U.S.

On the other hand, if you’re a veteran or service member, a VA loan is almost always the right choice. VA loans are backed by the U.S. Department of Veterans Affairs. They provide ultra-low rates and never charge private mortgage insurance (PMI). But you need an eligible service history to qualify.

Conforming loans and FHA loans (those backed by the Federal Housing Administration) are great low-down-payment options.

Conforming loans allow as little as 3% down with FICO scores starting at 620. FHA loans are even more lenient about credit; home buyers can often qualify with a score of 580 or higher, and a less-than-perfect credit history might not disqualify you.

Finally, consider a USDA loan if you want to buy or refinance real estate in a rural area. USDA loans have below-market rates — similar to VA — and reduced mortgage insurance costs. The catch? You need to live in a ‘rural’ area and have moderate or low income to be USDA-eligible.

Mortgage rate strategies for August 2025

Mortgage rates displayed their famous volatility throughout 2024. Fed cuts in September, November, and December, with the potential for more in 2025 provide optimism for descending rates.

Previously, the central bank held off on a rate hike at eight consecutive meetings, preferring to see if the economy would keep cooling organically. They finally deemed inflation’s downtrend as organic and made its first cuts since 2020.

However, the Trump Administration’s upward wealth consolidation and ongoing inflation battles forced the Fed to hold in January, March, May, June, and July. As always, the committee said it would adjust its policies as necessary — which could mean additional cuts or possibly none at all.

Here are just a few strategies to keep in mind if you’re mortgage shopping in the coming months.

Be ready to move quickly

Indecision can lead to failure or missed opportunities. That holds true in home buying as well.

Although the housing market is becoming more balanced than the recent past, it still favors sellers. Prospective borrowers should take the lessons learned from the last few years and apply them now even though conditions are less extreme.

“Taking too long to decide to make an offer can lead to paying more for the home at best and at worst to losing out on it entirely. Buyers should get pre-approved (not pre-qualified) for their mortgage, so that the seller has some certainty about the deal closing. And be ready to close quickly — a long escrow period will put you at a disadvantage.

“And it’s definitely not a bad idea to work with a real estate agent who has access to “coming soon” properties, which can give a buyer a little bit of a head start competing for the limited number of homes available,” said Rick Sharga.

If mortgage rates continue on a downward trajectory, more and more buyers will likely enter the market after being priced out on the sidelines. Being decisive (and prepared) should only play to your advantage.

Shopping around isn’t only for the holidays

Since interest rates can vary drastically from day to day and from lender to lender, failing to shop around likely leads to money lost.

Lenders charge different rates for different levels of credit scores. And while there are ways to negotiate a lower mortgage rate, the easiest is to get multiple quotes from multiple lenders and leverage them against each other.

“For potential home buyers, it’s important to get quotes from multiple lenders for a mortgage, as rates can vary dramatically, especially during such a volatile period,” said Odeta Kushi.

As the mortgage market slows due to lessened demand, lenders will be more eager for business. While missing out on the rock-bottom rates of 2020 and 2021 may sting, there’s always a way to use the market to your advantage.

How to shop for interest rates

Rate shopping doesn’t just mean looking at the lowest rates advertised online because those aren’t available to everyone. Typically, those are offered to borrowers with great credit who can put a down payment of 20% or more.

The rate lenders actually offer depends on:

• Your credit score and credit history
• Your personal finances
• Your down payment (if buying a home)
• Your home equity (if refinancing)
• Your loan-to-value ratio (LTV)
• Your debt-to-income ratio (DTI)

To figure out what rate a lender can offer you based on those factors, you have to fill out a loan application. Lenders will check your credit and verify your income and debts, then give you a ‘real’ rate quote based on your financial situation.

You should get three to five of these quotes at a minimum, then compare them to find the best offer. Look for the lowest rate, but also pay attention to your annual percentage rate (APR), estimated closing costs, and ‘discount points’ — extra fees charged upfront to lower your rate.

This might sound like a lot of work. But you can shop for mortgage rates in under a day if you put your mind to it. And shaving just a few basis points off your rate can save you thousands.

Mortgage interest rate FAQ

What are today’s mortgage rates?

Mortgage rates are rising, but borrowers can almost always find a better deal by shopping around. Connect with a mortgage lender to find out exactly what rate you qualify for.

¹Today's mortgage rates are based on a daily survey of select lending partners of The Mortgage Reports. Interest rates shown here assume a credit score of 740. See our full loan assumptions here.

Selected sources:

• https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
• http://www.freddiemac.com/research/datasets/refinance-stats/index.page