Mortgage rates remain stubbornly high this week, adding further pressure to a housing market already showing signs of fatigue. As of Tuesday the average 30-year fixed mortgage rate stands at 6.625%, according to Zillow Home Loans. The 15-year fixed rate sits at 5.625%, while adjustable options like the 7-year ARM average 7.375%.
These elevated rates are contributing to slumping home sales, falling housing starts, and rising concerns among economists.
Current mortgage rates by loan type
Here’s a breakdown of today’s national averages, based on Zillow’s latest data:
| Loan Type | Rate | APR | Points (Cost) |
|---|---|---|---|
| 30-Year Fixed | 6.625% | 6.777% | 1.546 points ($4,251.50) |
| 30-Year FHA | 6.375% | 7.051% | 1.482 points ($4,075.50) |
| 30-Year VA | 6.500% | 6.789% | 1.702 points ($4,680.50) |
| 20-Year Fixed | 6.500% | 6.737% | 1.842 points ($5,065.50) |
| 15-Year Fixed | 5.625% | 5.939% | 2.000 points ($5,500.00) |
Last updated: July 21, 2025
What’s driving today’s high mortgage rates?
Several factors are contributing to the persistently high rate environment:
- Inflation remains sticky, keeping pressure on the Federal Reserve to delay rate cuts.
- Global trade tensions, including the looming Aug. 1 tariff deadline set by the White House, are contributing to broader market volatility.
- The bond market, which influences mortgage pricing, is reacting to ongoing uncertainty in both fiscal and monetary policy.
According to Zillow, individual borrower characteristics—like credit score, location, and down payment size—still heavily influence rate offers. Even in a high-rate environment, buyers with strong financial profiles may qualify for slightly better terms.
Economists warn of housing market slowdown
Moody’s Analytics Chief Economist Mark Zandi has issued a sharp warning, stating that the housing sector has entered “red flare” territory. In recent commentary, Zandi noted:
“Home sales, homebuilding, and even house prices are set to slump unless mortgage rates decline materially from their current near 7% soon.”
Zandi emphasized that homebuilders are pulling back, delaying land acquisitions and walking away from previously common rate buy-down offers. According to the latest data:
- New single-family home sales dropped 13.7% in May
- Single-family housing starts fell 4.6% in June
- 38% of builders cut prices in July, up from 29% in April
Even resilient home price indices like Case-Shiller show a 0.3% monthly decline in April—the steepest since early 2024.
Can borrowers still get a lower rate?
Yes—but it takes strategy. Zillow Home Loans outlines several ways homebuyers may be able to lower their interest rate:
- Improve your credit score: Lenders reward lower-risk borrowers with better rates.
- Increase your down payment: A larger upfront payment lowers lender risk.
- Maintain a low debt-to-income (DTI) ratio: Reducing monthly debt obligations strengthens your mortgage profile.
Zillow offers a suite of tools to help borrowers navigate today’s challenging landscape:
- BuyAbility estimator: Customizes rate estimates based on individual financial profiles.
- Verified Pre-approval: A document-backed rate quote that can strengthen offers in a competitive market.
- Mortgage calculators: From affordability to amortization, buyers can explore how different terms impact their payment.
What happens next?
Unless rates drop materially in the coming months, most economists predict continued softness in the U.S. housing market. As supply increases and affordability tightens, home prices could face more downward pressure heading into fall.