Mortgage Rate Predictions for October: When Will Mortgage Rates Go Down in 2025?
The current forecast is for mortgage rates to remain elevated compared to where they stood pre-pandemic, but hover near 6.3% over the rest of the year.
Mortgage rates have fallen significantly over the last few months, reaching their lowest point of the year in mid-September. Then, the Federal Reserve made its first cut of 2025 on Sept. 18, which could help nudge mortgage rates down even further.
Despite recent rate drops, home affordability remains a concern with experts predicting that high rates and low affordability will keep the housing market sluggish for the remainder of this year.
Mortgage rates forecast for October 2025: Will interest rates continue to drop?
Quick answer: Mortgage interest rates are expected to remain elevated in October — more than double the 2021 lows of around 2.65% — and land around 6.4% by the end of the year.
National average rates ended September at 6.30%, and experts don’t anticipate significant declines in the coming months. Fannie Mae, for example, expects rates to close the year at approximately 6.4%.
Short term: Those waiting for a rate drop should keep in mind that lower rates can substantially increase the demand for housing, which can cause home prices to spike — potentially cancelling out some of the savings from the lower interest rates.
Long term: Even if mortgage rates stay below 6.4% by the end of 2025, it’s almost certain that rates will remain high compared to the levels seen during the height of the COVID-19 pandemic, when average 30-year mortgage rates were around 2.65%. Those record lows, as nice as they were, might not ever be seen again in our lifetimes.
Rates have fallen by a half-point or more since June and even more than that since January, and that’s a big deal. For example, on a $500,000 home with a 30-year mortgage at 7% with a 10% down payment, you’d pay $3,895 per month. Drop that rate to 6.25% and your payment falls to $3,672. That’s a difference of $223 per month, which can be really significant to the average American family who is on a tight budget.
Will home affordability improve in October?
Quick answer: We’re likely to see at least a small rate dip in October. It may be enough to change the overall picture for some homebuyers, though likely won’t be for most. Fueled by high home prices, low inventory and steep mortgage rates, home affordability remains low today and home sales are the slowest they’ve been in several decades.
Potential homebuyers should expect only a slight improvement in affordability in October. Here’s why:
Fed rate cuts
The Fed cut the federal funds rate at its September meeting, which should help mortgage rates continue to move downward. However, it’s uncertain whether a cut is on the horizon for the October meeting. Fed Chairman Jerome Powell and several other committee members have expressed their desire to move cautiously, but some members — notably Trump-appointees Stephen Miran and Michelle Bowman — are calling for aggressive cuts.
Falling mortgage rates can spark rising home prices and, if rates do fall, whether the balance will tip toward increased affordability or a troublingly hot housing market remains to be seen.
A Federal Reserve rate cut directly affects adjustable-rate mortgages, since their interest rates are calculated using a number — known as an index — that fluctuates with the broader economy. The Fed’s cuts are to the federal funds rate, which is a benchmark index.
The Fed’s rate cuts indirectly impact fixed-rate mortgages, which can move more independently and, in some cases, can even move in the opposite direction of the federal funds rate. That said, when the federal funds rate drops, mortgage rates tend to follow. They can also drop in anticipation of a federal funds rate cut, as they did just before the Fed’s September 2024 rate cut.
Home prices are low in October
Historically, October is a great time to buy a home. It’s the least expensive month in which to buy a house, according to an analysis by real estate data company ATTOM.
Oct. 2 is also one of the best days of the year to purchase — the days on which you pay one of the lowest premiums — according to the same analysis.
Additionally, the potential for some small price breaks is on the horizon. If the amount of available housing — also known as housing “inventory” — rises significantly, that could help with affordability. Inventory has grown in recent months, and in August rose nearly 12% YoY.
Home affordability remains low
The housing market continues to be prohibitively expensive for many Americans due to:
- Rising home prices: More than 75% of metro areas in the U.S. saw the median existing home price rise in the second quarter of 2025. In fact, median home prices have risen by roughly 12% over the last four years, landing at $410,800 in Q2 2025.
- Expensive monthly payments: The national median monthly mortgage payment homebuyers applied for was a hefty $2,100 as of August 2025.
The housing shortage stems from several interconnected factors:
- Mortgage rate lock-in effect. More than 80% of homeowners have mortgage rates below 6% As of the fourth quarter of 2024, according to data from the Federal Housing Finance Agency , making them reluctant to sell and take on higher rates.
- Slow home sales. Existing home sales are near their slowest pace in nine months, but are picking up slowly. Purchase volume was 16% higher than this same time last year, according to the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey for the week ending Sept. 26, 2025.
- New market dynamics. For the first time since 1989, buying an existing home costs more than buying a newly constructed home, according to the National Association of Home Builders.
The good news is that there’s reason to believe the housing shortage could end in 2025. Several market experts suggest that if mortgage rates stabilize or decline and more homeowners become willing to move, this could be the final year of widespread inventory shortages.
Explore whether it’s better to rent or buy in today’s market.
Current mortgage rates for October 2025
are averaging:
6.37%
Current average rates are calculated using all conditional loan offers presented to consumers nationwide by LendingTree’s network partners over the past seven days for each combination of loan program, loan term and loan amount. Rates and other loan terms are subject to lender approval and not guaranteed. Not all consumers may qualify. See LendingTree’s Terms of Use for more details.are averaging:
5.38%
Current average rates are calculated using all conditional loan offers presented to consumers nationwide by LendingTree’s network partners over the past seven days for each combination of loan program, loan term and loan amount. Rates and other loan terms are subject to lender approval and not guaranteed. Not all consumers may qualify. See LendingTree’s Terms of Use for more details.Current refinance rates for October 2025
30-year Refinance Rates
are averaging:
6.69%
Current average rates are calculated using all conditional loan offers presented to consumers nationwide by LendingTree’s network partners over the past seven days for each combination of loan program, loan term and loan amount. Rates and other loan terms are subject to lender approval and not guaranteed. Not all consumers may qualify. See LendingTree’s Terms of Use for more details.15-year Refinance Rates
are averaging:
6.04%
Current average rates are calculated using all conditional loan offers presented to consumers nationwide by LendingTree’s network partners over the past seven days for each combination of loan program, loan term and loan amount. Rates and other loan terms are subject to lender approval and not guaranteed. Not all consumers may qualify. See LendingTree’s Terms of Use for more details.Refinancing in 2025: What you need to know
Homeowners looking to refinance are finally catching a break. Refinance application volume surged 42% above last year’s levels, with refinances accounting for nearly 60% of mortgage applications as of late September — the highest share since January 2022.
This is a big moment for homeowners who have been locked out of refinancing opportunities for most of this year. Those sitting on the low rates they secured before 2022 had little incentive to refinance as the market began its march upward, moving ever further from the favorable rates of 2021 which, even at their highest point, barely exceeded 3%.
But refinance application volume grew steadily over the course of 2025 and really took off in late summer as falling mortgage rates finally made refinancing attractive again for more homeowners.
Who does refinancing make sense for right now?
It’s typically smart to hold off on a refinance until you could get a rate that’s at least 50 basis points Basis points are units used to measure changes in interest rates. One hundred basis points are equal to 1 percentage point, so 50 basis points are equal to 0.50%. lower than the one you already have — and ideally 75 to 100 basis points lower.
No matter the market conditions, homeowners should always know exactly what benefit they’ll get out of a refinance before committing to one. For example, if you’re refinancing an adjustable-rate mortgage (ARM) to a fixed-rate loan, tapping your equity with a cash-out refinance or getting a new interest rate that will lower your payments.
“It may make sense to wait until 2026 to refinance, given that rates are expected to fall later this year,” Schulz says, “but the truth is that there’s no one-size-fits-all answer for when it is best to refinance.”
Weigh how the savings you could achieve in the current market will affect you — if they’ll pull you back from the edge of financial desperation, it makes sense to act quickly. If you’d just like to save a little money, it could make sense to wait since rates are expected to dip closer to 5.9% by the end of 2026.
The big picture: What’s driving today’s mortgage rates?
Although pandemic-related inflation took longer to cool than expected, it is cooling. In fact, after reaching a high point in 2022, it slowed down steadily all the way through the spring of 2025. This suggests that the most acute pandemic-driven price pressures have largely worked through the system.
However, we’re now dealing with policy-driven inflationary pressures rather than purely pandemic-related ones. With President Trump’s tariffs continuing to percolate through the U.S. economy, inflation is still running above the Fed’s target. So, for now, getting into the market means making peace with a rate between 6% and 7%.
Takeaway: Homebuyers should focus on what they can afford in the current market rather than obsessing over the future. “Shop around for rates,” Schulz urges. “Yes, rates are going to be high everywhere, but they can still vary significantly among lenders. Those differences can be a big deal because even a fraction of a point difference on an interest rate can save you hundreds or even thousands of dollars over the life of the mortgage.”
So far, mortgage interest rates have dropped slightly since President Trump’s tariffs went into effect. However, many economists believe that the tariffs have already begun to create inflationary pressure, which could eventually push up mortgage interest rates.
Potential homebuyers should prepare themselves for the distinct possibility that tariffs will cause housing prices to rise, perhaps significantly.
How to get the best mortgage rates
1. Boost your credit score
Pay your bills on time, minimize your credit card balances and avoid opening several new credit accounts at once. You’ll get the best conventional mortgage rates with a 780 credit score or higher.
Learn more about ways to boost your credit score.
2. Compare rates from multiple lenders
LendingTree data consistently show that consumers who shop around for mortgage rates typically save money. Get a loan estimate from three to five different mortgage lenders and compare the rates and terms you’re offered.
Learn more about our picks for the best mortgage lenders.
3. Consider paying points
A mortgage point costs 1% of your loan amount, and paying for points allows you to “buy” a cheaper interest rate. Read the fine print if you see an online rate that looks lower than what other lenders are offering — there’s a good chance you’ll pay points to get it.
Ready to see competitive rate offers on LendingTree?
Frequently asked questions
If you can afford a mortgage and find a home that suits your needs, now can be a good time to buy, despite high rates and a limited number of homes for sale.
Timing the market is extremely difficult, if not outright impossible. So if you’re waiting to make a choice based on what you hope will happen instead of what’s already going on, you could end up missing out on a lot of good opportunities — even in today’s expensive housing market.
Although President Trump has promised to lower interest rates, the reality is that a president can’t unilaterally change interest rates. Interest rates are determined by several factors, including the financial markets and the Federal Reserve — not executive orders or presidential decisions.
Mortgage rates are even more complex, and respond to additional factors like the cost of building materials, employment rates and housing inventory.
“There’s no reason to think that the housing market is going to crash anytime soon,” Schulz says. Low unemployment and foreclosure rates, as well as a moderate housing inventory increase are all signs that the housing market is relatively healthy, he adds.
And, if you’re thinking a housing market crash could even bring some benefits — like lower home prices — he offers this reminder: “These things don’t happen in a vacuum. A housing market crash very well might be accompanied by a recession, for example. That would likely mean increased unemployment and greater overall economic uncertainty, leaving people even less able to afford to buy.”
A mortgage interest rate is the base rate you’re charged to borrow money, but a mortgage annual percentage rate (APR) is the total cost of taking out a mortgage (the interest rate plus closing costs and fees). Both numbers are expressed as a percentage. For more details, check out our guide to distinguishing an APR versus interest rate.
The Federal Reserve’s monetary policy indirectly impacts fixed-rate mortgages, which are often tied to the 10-year U.S. Treasury bond yield. The Fed’s policies have a direct effect on loans with variable interest rates, including ARMs, credit cards and home equity lines of credit (HELOCs).
Haggle for a lower interest rate by using your mortgage offers as leverage. Ask each lender about matching your lowest quoted rate. Consider making a larger down payment, select an ARM loan with a lower initial rate or ask your lender about your mortgage buydown options.
Discuss mortgage rate lock options with your loan officer once you’re under contract on a home and moving through the application process. Rate locks usually last between 30 and 60 days, but they can be longer. Watch your expiration date — you may face a rate lock extension fee if your loan doesn’t close before your rate lock expires.
Mortgage rates dropped to a historical low of 2.65% in January 2021, when the Federal Reserve cut the federal funds rate to 0% to stabilize the post-pandemic economy.
View mortgage loan offers from up to 5 lenders in minutes
Read more
10 Types of Mortgage Loans Explained Updated February 5, 2025 From conventional loans to government-backed FHA, VA and USDA loans, learn about the different types…Read more
How to Shop for a Mortgage in 6 Steps Updated March 25, 2025 Learn how to shop for a mortgage to make sure you pick a home loan…Read more