In a welcome development for the housing market, both mortgage and refinance rates have shown a slight downward trend in early July. This offers a modest reprieve to borrowers who have faced elevated costs for months, a factor that has kept many potential homebuyers and refinancing candidates on the sidelines.
According to Bankrate, the average 30-year fixed refinance rate eased to 6.80% as of July 1st, representing a 3-basis point drop from the previous week. Concurrently, Freddie Mac data indicates the average 30-year fixed mortgage rate settled at 6.77% in late June, a marginal decline from 6.81% the week prior. This subtle but consistent movement extends a pattern of rate stability observed since April, with borrowing costs largely remaining within a narrow 15-basis point range.
Current refinance rates largely mirror these trends. Bankrate reported a 30-year fixed refinance rate of 6.81% and a 15-year fixed refinance rate of 6.10% as of July 2nd. This period of stability is notable, as rates have consistently remained below 7% for an impressive 23 consecutive weeks.
Industry experts anticipate minimal fluctuations in the immediate future. Sam Williamson, senior economist at First American, stated, "Mortgage rates are expected to remain in the mid-to-upper 6% range in July." Echoing this sentiment, Ralph DiBugnara, founder at Home Qualified, projects that "average rates for July should average around 6.875% for a 30-year fixed."
Federal Reserve Policy Weighs on Markets
The cautious stance of the Federal Reserve continues to exert influence over mortgage markets. Following three rate cuts in 2024, the central bank has maintained steady rates throughout 2025. Jay Crowell, national retail division president at Cornerstone Home Lending, observed, "The Fed's still in a cautious, wait-and-see stance."
Several factors contribute to these sustained elevated rates. Persistent inflation concerns and newly implemented tariffs, which major retailers report are driving price increases, play significant roles. Additionally, geopolitical tensions in the Middle East introduce another layer of uncertainty, although they could potentially exert modest downward pressure as investors gravitate towards safer assets like U.S. Treasuries.
Market Outlook for Borrowers
Despite current levels, it's important to note that mortgage rates remain below their historical average of 7.8% since 1971. Various housing authorities project that rates will conclude the third quarter below present levels, with predictions ranging from 6.40% to 6.80%.
The Mortgage Bankers Association forecasts that 30-year mortgages will average 6.8% from July through September. Ralph DiBugnara highlighted a positive perspective for borrowers, noting, "We are closer to lower mortgage rates than we were at the beginning of the year." This suggests that while significant drops might not be imminent, the overall trajectory remains favorable for those seeking home financing.
