Mortgage Rates Plummet to 20-Month Low—Here’s How to Lock In Your Best Deal Now

Average U.S. mortgage rates have slipped for a second straight week, giving home shoppers and homeowners a narrow but valuable window to lock in loans before the next Federal Reserve decision. Freddie Mac’s Primary Mortgage Market Survey shows the 30-year fixed rate dipped to 6.81% for the week ending June 26, 2025, the lowest level since early May. National lender surveys from Bankrate and Mortgage News Daily confirm the softening, pegging the daily average near 6.67% on June 30. Why rates are easing • Inflation progress: May’s core PCE price index cooled to 2.6% year-over-year, its lowest pace since 2021, reinforcing bets that the Fed could begin trimming short-term rates as soon as September. • Bond-market rally: The 10-year Treasury yield fell below 4.25% this week, pulling mortgage rates down in tandem. • Seasonal slowdown: Late-summer demand for purchase loans typically softens, allowing lenders to reduce pricing to attract volume. What it means for buyers • Affordability gains: A 0.20-percentage-point drop cuts the monthly payment on a $400,000 loan by roughly $56 and boosts buying power by about $10,000. • Inventory still tight: Active listings remain 36% below 2019 levels, so shoppers should get pre-approved quickly and consider adjustable-rate or 15-year options (now averaging 5.99%) to widen their price range. Refinance outlook Roughly 7.4 million existing mortgages carry rates above 7%, according to Black Knight analytics, and could save at least 50 basis points by refinancing today if credit and equity allow. Analysts expect a sharper refi wave once 30-year rates breach the psychologically important 6.50% threshold, likely after the first Fed cut. Market forecast CNET’s weekly rate forecast sees the 30-year holding between 6.6% and 6.9% through July 15; a break below 6.6% would signal a decisive downward trend heading into the fall home-buying season. Economists at Fannie Mae still project an average 6.4% rate for Q4 2025, but caution that sticky shelter inflation or a resurgence in wage growth could stall progress. Action steps 1. Rate-lock watch: Buyers under contract should ask lenders about float-down options that let them capture a lower rate if the market improves before closing. 2. Credit check: Aim for a 760+ FICO to access the best pricing; paying down revolving debt can shave up to 0.40 ppt off the offered rate. 3. Refi readiness: Homeowners considering refinancing should gather two years of W-2s, recent pay stubs, and a full asset list now so they can act quickly when rates near 6.5%. Bottom line Mortgage rates have retreated from their spring highs, but volatility remains. Buyers who lock soon—and refinance later if needed—stand to benefit, while homeowners with loans above 7% should run the numbers on a mid-6% refinance before summer ends.