Mortgage Interest Rates Today: Mortgage Rates Drop to Four-Month Low as Pressure Mounts on Fed To Cut

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Mortgage rates on Thursday dropped to levels not seen since April as the Federal Reserve’s policymakers faced a growing pressure to cut its benchmark interest rate after a disappointing jobs report that triggered a presidential outburst.

The average rate on 30-year fixed home loans was 6.63% for the week ending Aug. 7, down from 6.72% the previous week, according to Freddie Mac. Rates averaged 6.47% during the same period in 2024.

“The 30-year fixed-rate mortgage dropped to its lowest level since April,” says Sam Khater, Freddie Mac’s chief economist. “The decline in rates increases prospective homebuyers’ purchasing power and our research shows that buyers can save thousands by getting quotes from a few different lenders.”

The latest decline in the 30-year mortgage rate comes on the heels of last week’s meeting of the Federal Open Market Committee (FOMC), during which two members challenged the majority’s decision to maintain the central bank’s key rate at its current 4.25% to 4.5% range.

The public dissent within the central bank’s ranks, the first in 30 years, bolsters expectations of a potential Fed policy shift on rates as early as this fall.

The FOMC meeting was followed by the release of the latest jobs report, which revealed that the U.S. economy experienced a slowdown in hirings last month, adding just 73,000 jobs, as the unemployment rate increased to 4.2%.

President Donald Trump reacted to the news by firing the Bureau of Labor Statistic commissioner, whom he accused of manipulating the numbers for political reasons.

As far as the housing market is concerned, homebuyers hoping for some relief from elevated interest rates will have to wait longer as the summer draws to a close—although Thursday’s Freddie Mac reading offers hope.

“Even with rates drifting lower, they remain above pre-pandemic levels, continuing to weigh heavily on affordability,” says Realtor.com® Senior Economist Anthony Smith. “For many would-be buyers, even a modest dip in borrowing costs can improve monthly payment calculations and expand their range of options.”

However, there is some good news.

Housing inventory continues to increase, with active listings surging nearly 25% in July compared to a year ago, driving the total number of for-sale homes above 1.1 million for the third consecutive month.

Homes are also sitting on the market longer, with the typical property waiting for a buyer a full week longer than last year.

“As sellers face more competition and more buyers wait on the sidelines, the market is gradually tilting toward more buyer-friendly conditions,” notes Smith.

How mortgage rates are calculated

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 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.

How your credit score affects your mortgage

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.