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The U.S. economy is going strong, inflation is holding above the Federal Reserve’s target rate of 2 percent, and the central bank has yet to lower its benchmark rate in 2025. Add up those key variables, and mortgage rates aren’t likely to move much this month.

“The Fed is not in a rush to cut interest rates, and there is still a lot of uncertainty about what impact tariffs will have on consumer inflation,” says Greg McBride, Bankrate’s chief financial analyst. “Expect more of the same as mortgage rates yo-yo up and down within the familiar range of the past five months.”

For months, mortgage rates have been held aloft by the combination of a still-strong economy, inflation fears and growing concerns about a rising federal deficit.

So much for hopes that mortgage rates were headed back into the 5 percent range. The average 30-year mortgage rate began declining from 7 percent last summer, fell as low as 6.2 percent in September, then quickly reversed course, tracking back above 7 percent by the end of 2024, according to Bankrate’s weekly lender survey. However, as of July 30, rates stood at 6.75 percent.

The Fed doesn’t directly set mortgage prices, but it does influence them. The central bank cut its benchmark rate three times last year. The Fed next meets in September.

“If a September rate cut starts to be more likely, it is possible that we could see mortgage rates edge downward at the end of the summer, similar to what we saw last year at this time,” says Lisa Sturtevant, chief economist at Bright MLS. “But there are still factors at play that could keep mortgage rates higher. If inflation expectations continue to be high, mortgage rates could also remain higher. And, complicating things, if investors believe that rate cuts are coming under pressure from the Trump administration, that will also drive mortgage rates higher.”

Learn more: How the Fed affects mortgage rates

Will mortgage interest rates go down again?

The possibility of sub-6 percent mortgage rates has grown fainter. Fannie Mae predicts rates will edge down to 6.4 percent by the end of the year, while the Mortgage Bankers Association expects 30-year rates will barely decrease, to 6.7 percent by the end of 2025.

“The good news is that the economy is chugging along. But with inflation ticking higher, the Fed has no reason to cut rates,” says Melissa Cohn of William Raveis Mortgage. “The next rate cut may not happen until the end of the year.”

Learn more: Housing market trends to watch in 2025

Current mortgage rate trends

Higher mortgage rates have kept homeowners clinging to lower-cost loans, a trend known as the “lock-in effect.” Meanwhile, the median national home price clocked in at $435,300 in June, an all-time record, according to the National Association of Realtors.

What to do if you’re getting a mortgage this year

• Improve your credit score. A lower credit score won’t prevent you from getting a loan, but it can make all the difference between getting the lowest possible rate and more costly borrowing terms. The best mortgage rates go to borrowers with the highest credit scores, usually at least 780.
• Save up for a down payment. Putting more money down upfront can help you obtain a lower mortgage rate, and if you have 20 percent, you’ll avoid mortgage insurance, which adds costs to your loan. If you’re a first-time homebuyer and can’t cover a 20 percent down payment, there are loans, grants and programs that can help. The eligibility requirements vary by program, but are often based on factors like your income.
• Understand your debt-to-income ratio. Your debt-to-income (DTI) ratio compares how much money you owe to how much money you make, specifically your total monthly debt payments against your gross monthly income. Not sure how to figure out your DTI ratio? Bankrate has a calculator for that.

FAQ

• How are mortgage rates determined?
  

  Mortgage rates are not directly set by any one entity. Instead, mortgage rates grow from a complicated mix of economic factors. Lenders typically set their rates based on the return they need to make a profit after accounting for risks and costs. The Federal Reserve gets a lot of attention, but it doesn’t directly set mortgage rates. The closest proxy for mortgage rates is the 10-year Treasury yield. Historically, the typical 30-year mortgage rate was about 2 percentage points higher than the 10-year Treasury yield. That “spread” has been closer to 3 percentage points since the pandemic.

• When should I refinance my mortgage?
  

  Deciding when to refinance is based on many factors. If rates have fallen since you took out your mortgage, refinancing might make sense. A refi can also be a good idea if you’ve improved your credit score and could lock in a lower rate. A cash-out refinance can accomplish that as well, plus give you the funds to pay for a home renovation or other expenses.