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There’s a flicker of movement in a housing market that’s been stuck in neutral.
According to Freddie Mac, the average 30-year fixed mortgage rate is 6.56% as of the week ending August 28, 2025. This is nearly half a point lower than January’s 7.04% and 0.16 points lower than a month ago. But is that enough to move the market?
With mortgage rates at a 10-month low, buyers might catch some breathing room in a market defined by high prices and stiff competition.
And while the drop may seem small, it can still improve (albeit slightly) a buyer’s purchasing power and save some money over the life of the loan.
On a median-price home, or a $410,800 loan, the drop from 6.72% a month ago to 6.56% today saves about $50 on the monthly bill. Compared with January’s high of 7.04%, today’s rate trims about $127 a month, adding up to more than $45,000 over the life of the loan.
Experts say this drop may be a sign of lower rates to come, but it may take heavier rate cuts to get buyers to bite.
A Psychological Nudge, Not a Wave
Shashank Shekhar, founder and CEO of InstaMortgage, says the current change is more of a mindset shift than a market mover.
“It can move a buyer who was already on the fence, but it’s not enough to suddenly bring a large wave of new buyers into the market,” he says.
Even as buyers sit tight for deeper cuts, Shekhar says chasing a perfect rate is a risky game.
“If you can afford it now and it’s the right home, it’s worth considering. Waiting is a gamble. Prices could rise or competition could return,” he says.
In high-cost areas like San Jose and greater Santa Clara County, where the average home price is around $1.5 million, the impact of lower rates is more modest.“ Someone with a $3,000 monthly budget can now afford a home valued at $458,750 versus $439,000 at May’s high rates,” says Alexander Kalla, a realtor at Keller Williams Bay Area Estates. “It’s meaningful, but in high-cost markets, affordability remains a major challenge.”
Elevated rates aren’t just hurting buyers; they’re making it harder for sellers to unload their properties. In response, sellers are offering concessions to take the bite out of high prices.
Brett Johnson, owner and licensed real estate agent at New Era Home Buyers in Denver, says that on the seller side, he sees more flexibility than during the peak market years.
“Sellers might cover closing costs or offer repair credits to get the deal done,” he says.
Kalla is seeing the same trend.
“Price reductions and concessions are more common,” Kalla says. “We’re seeing paid inspections, repair credits—even sellers buying down buyers’ mortgage rates.”
What This Means for Refinancing
Homebuyers aren’t the only ones watching mortgage rates. Homeowners with high rates are keeping their eyes on what’s happening, too.
While the drop is modest, it could still make refinancing worth exploring for homeowners who locked in rates above 7% over the past year.
Even a quarter-point reduction can lower monthly payments and total interest costs, especially for homeowners planning to stay put for several more years.
Borrowers should weigh the savings against closing costs and compare the APR across lenders, since fees can offset the benefit of a lower rate.
Four Ways To Be Ready To Buy a Home
Rates can shift quickly, so buyers need to stay ready for when the right home appears. Here are four steps to make the most of the current dip.
- Get multiple quotes. Freddie Mac data shows borrowers can save thousands over the life of a loan by comparing offers.
- Run the numbers. Even a small rate drop can expand your budget or lower your payment, but only you know if it’s enough.
- Watch local inventory. More listings can give buyers leverage, while tight markets may erase savings from lower rates.
- Be ready to lock. If you find a home you like and rates work for your budget, be prepared to move fast.
Mortgage rates may not be plunging, but they’re sliding just enough to matter—especially for buyers and refinancers who stay ready, compare offers and act when the numbers work.
