Mortgage Interest Rates

Average mortgage rates in October 2025 trended downward to the lowest rates in over a year. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.25% in October, 10 basis points (bps) lower than September. Meanwhile, the 15-year rate declined to 5.49%. Both the 30-year and 15-year rates remain lower than a year ago.

How Much Will Rates Decline?

The 10-year Treasury yield, a key benchmark for long-term borrowing, averaged 4.09% in October – a 5-basis point decrease from the previous month. Markets had already priced in rate cuts from the Federal Reserve at the start of the month, resulting in relatively unchanged rates following the announcement of a 25 bps cut to the federal funds rate on October 29.

Looking forward, the economy faces several headwinds that could have an impact on interest rates, including a weakening job market and elevated inflation. Additionally, there are wildcard factors such as the upcoming Supreme Court case regarding the legality of recent tariffs and lack of economic data. As a result, the vote at the December Federal Reserve meeting is difficult to predict.  

Impact of Rate Declines on Housing

Falling mortgage rates have shown some small impacts on housing activity. According to the latest Mortgage Bankers Association report, mortgage application activity strengthened, with refinancing applications rising and purchase applications also increasing. Additionally, existing home sales rose to a seven-month high in September. There is no data available for new home sales in September due to the government shutdown.  

However, faced with stubbornly high home prices and elevated interest rates, many would-be buyers continue to stay on the sidelines until housing affordability conditions improve.