Mortgage Rates Plunge to 6.19%—Marking Lowest Level in Over a Year

Mortgage rates fell Thursday to their lowest level in over a year, driven by a drop in 10-year Treasury yields amid general economic uncertainty intensified by the ongoing federal government shutdown.

The average rate on 30-year fixed home loans declined to 6.19% for the week ending Oct. 23, down from 6.27% the week before, according to Freddie Mac. Rates averaged 6.54% during the same period in 2024.

“Mortgage rates continued to trend down this week, hitting their lowest level in over a year,” says Sam Khater, Freddie Mac’s chief economist. “At the start of 2025, the 30-year fixed-rate mortgage surpassed 7%, while today it hovers nearly a full percentage point lower. This dynamic has kept refinancings high, accounting for more than half of all mortgage activity for the sixth consecutive week.”

The easing in mortgage rates by roughly 50 basis points compared to three months ago came after the Treasury yields, which influence long-term borrowing costs, slipped to year-to-date lows below 4%.

The move comes against the backdrop of a data vacuum created by the shutdown, now more than three weeks old, which has deprived policymakers at the Federal Reserve of key information about the current state of the labor market they rely on to guide their decisions.

The Fed has a dual congressional mandate to promote maximum employment while keeping inflation as close to its 2% target as possible.

Officials at the central bank will have access to the latest Consumer Price Index (CPI) report, expected Friday after its release was delayed by more than a week due to the standoff in Washington, DC.

But Realtor.com® Senior Economist Jake Krimmel says the CPI data for September, which is a key measure of inflation, is more likely to impact markets than Fed policy.

The central bank’s Board of Governors is all but certain to reduce its federal funds rate by a quarter of a percentage point at the next FOMC meeting on Oct. 28-29, but Krimmel says that cut is already being priced into Treasury yields and mortgage rates.

Meanwhile, the prospect of an additional rate reduction in December remains uncertain.

Krimmel notes that Mortgage Bankers Association economists have warned that growing government budget deficits and elevated inflation expectations will continue to put upward pressure on long-term rates.

For housing, homebuyers and refinancers may see gradual relief in payments and slightly better negotiating conditions in the short run.

In the long run, Krimmel says a lasting housing market recovery will hinge on lower mortgage rates, a significant boost in inventory to ease prices, and job growth strong enough to overcome economic uncertainty.

Mortgage rates are determined by a delicate calculus that factors in the state of the economy and an individual’s financial health. They are most closely linked to the 10-year Treasury bond yield, which reflects broader market trends, like economic growth and inflation expectations. Lenders reference this benchmark before adding their own margin to cover operational costs, risks, and profit.

When the economy flashes warning signs of rising inflation, Treasury yields typically increase, prompting mortgage rates to go up. Conversely, signs of falling inflation or weakness in the labor market usually send Treasury yields lower, causing mortgage rates to fall.

The mortgage rates you’re offered by a lender, however, go beyond these benchmarks and take some of your personal factors into account.

Your lender will closely scrutinize your financial health—including your credit score, loan amount, property type, size of down payment, and loan term—to determine your risk. Those with stronger financial profiles are deemed as lower risk and typically receive lower rates, while borrowers perceived as higher risk get higher rates.

Your credit score plays a role when you apply for a mortgage. A credit score will determine whether you qualify for a mortgage and the interest rate you’ll receive. The higher the credit score, the lower the interest rate you’ll qualify for.

The credit score you need will vary depending on the type of loan. A score of 620 is a “fair” rating. However, people applying for a Federal Housing Administration loan might be able to get approved with a credit score of 500, which is considered a low score.

Homebuyers with credit scores of 740 or higher are typically considered to be in very good standing and can usually qualify for better rates.

Different types of mortgage loan programs have their own minimum credit score requirements. Some lenders have stricter criteria when evaluating whether to approve a loan. They want to make sure you’re able to pay back the loan.