According to the data from Freddie Mac, both long-term and short-term mortgage rates have slightly decreased this week. The latest report from the Mortgage Bankers Association on August 28 stated that homebuyers’ affordability has improved. Financial experts believe that the interest rate cuts by the Federal Reserve still play a significant role.
Freddie Mac’s data on Thursday, August 28, showed that the interest rate for 30-year fixed-rate mortgages decreased from 6.58% last week to 6.56%, with a monthly average of 6.59%. The interest rate for 15-year fixed-rate mortgages was 5.69%, with a monthly average of 5.71%.
Freddie Mac’s report noted that mortgage rates are at their lowest level in 10 months. With low rates and steady economic growth driving up housing demand, many potential homebuyers are facing affordability challenges. However, the sustained lower rates may serve as motivation for them to enter the market.
The Mortgage Bankers Association (MBA) reported on August 28 that homebuyers’ affordability improved in July.
Edward Seiler, Vice President of Housing Economics at MBA and Executive Director of the American Housing Research Institute, stated, “With mortgage rates declining and incomes continuing to grow strongly, housing affordability has improved for two consecutive months.” He added, “MBA predicts that for the remainder of 2025, mortgage rates will remain between 6.5% and 7%.”
While current loan rates remain high, ongoing income growth and a slowdown in home price increases should boost the purchasing power of potential homebuyers in the coming months, according to Seiler.
Michael Busler, a finance professor at Stockton University in New Jersey, commented that the mortgage rates are holding steady around 6.59% based on current data. He noted that, “From a historical perspective, this level is still high, despite being similar to last year’s mortgage rates.”
“These high rates continue to weigh on the real estate market, especially making it difficult for new homebuyers. There is a general expectation that the Federal Reserve will cut rates in September and possibly again in November and December,” he said.
Professor Busler emphasized the crucial role of the Federal Reserve’s rate cuts, stating that “lower rates will increase demand for large commodities like homes and cars. Lower rates will also decrease the cost of financing for business expansion, potentially leading to increased investments. Lastly, credit card debt will become cheaper, meaning consumers may purchase more goods and services through credit.”