Reaching its lowest point in 10 months on August 4, the daily average mortgage rate dropped to 6.57%.
On the median-priced U.S. home—which goes for roughly $447,000—a monthly mortgage payment is $2,862 with today’s average rate, according to Redfin. When rates were above 7% in mid-May, the monthly payment would have been $2,983—over $100 more.
To go beyond the headlines, RISMedia spoke with two mortgage leaders to understand what this drop in rates means for buyers.
Melissa Cohn, regional vice president at William Raveis Mortgage, says that even though rates have dropped, they’re still not quite there.
“The reality is, yes, rates are lower, but they haven’t plummeted. They took a nice drop down…probably dropped a quarter of a percent, which is real money for homebuyers, but it hasn’t been a dramatic drop,” she says. “I think the only way we will actually see rates really continuing to drop will be with ongoing weak economic data.”
And although the rate drop isn’t that dramatic, it does still help buyers, to an extent, adds Cohn.
“A drop of an eighth or a quarter point isn’t going to let you buy the next step up of a home, but it’s certainly less painful than at a higher rate.”
Her advice to buyers, particularly in busier markets, is that people should buy when they find the right house, since it won’t stay in the market forever. They can always refinance, she adds.
To put these rates in perspective, she pointed back to expectations for rates a year ago.
“Last year, we were hoping that we would see mortgage rates much lower this year. And unfortunately, due to tariffs…and inflation, rates haven’t come down,” Cohn said. “I think we’re hopeful that perhaps, we’re going to see the beginning of a trend with lower rates. But, you know, it’s good news for homebuyers, but it generally means bad news for the economy.”
Shant Banosian, president of Rate Mortgage says this new drop in rates gives his clients more buying power.
For his average client, with their average loan amount of about $650,000, they will now have about $35,000 more in buying power today than at the start of the year, he says. If they stay in the same budget, they can save about $200 a month, he adds.
“It comes at a time where, you know, the tables have kind of shifted to some degree, whereas it’s not quite a seller’s market anymore,” Banosian says. “Inventory in most markets has creeped back up and even though, technically, it’s still a seller’s market, buyers are doing much better. So now, you’ve got more favorable rates, more buying power, better budget, as well as the odds of them getting their offer accepted is better, because it’s a more balanced market.
In terms of waiting it out or buying now, Banosian, like Cohn, is recommending buying now and refinancing later.
“There’s certainly no guarantee that rates are going to come down in the future. This has happened before…where it seems like rates are going to keep dipping and then they spike back up,” he says. “So there’s still a lot of information that can impact the markets. But for now, I think it’s an amazing opportunity, and timing is actually really great for them, so they can utilize it.”
July’s jobs report
This recent rate drop follows a weaker-than-average July jobs report, with the U.S. adding fewer jobs than anticipated.
“The jobs report on Friday had everything to do with the lower rates,” Cohn says. “When the Fed concluded their last meeting…they said that they felt the employment sector was in decent shape and therefore, they were more focused on the inflation that would be caused by tariffs…and they did not cut rates in July, and it doesn’t feel like they will cut rates in September.
“Everything is so volatile and things move so quickly these days that we’re not home-free in terms of hoping for lower rates yet.”
Following the report, along with a notable downward revision for the May and June numbers, President Donald Trump called the report “rigged” and fired Commissioner of Labor Statistics Dr. Erika McEntarfer.
“McEntarfer said there were only 73,000 jobs added (a shock!) but, more importantly, that a major mistake was made by them, 258,000 Jobs downward, in the prior two months,” he wrote in a Truth Social post.
According to Axios, it’s not uncommon for the Bureau of Labor Statistics (BLS) to revise its numbers. Of the about 629,000 work sites they report on, some of the businesses don’t respond before the report is released, but the BLS continues to take these reports and adds the revisions after the fact. The revisions have been conducted since 1979.
