Mortgage Rates Hold Steady Amid Fed Rate Cuts, Refi Decisions Hinge on 1% Savings Threshold

The current refinance mortgage rates for Aug. 18, 2025, show a modest but notable range across different loan types and terms. According to data from Zillow, the average rate for a 30-year, fixed-rate conventional mortgage stands at 6.66%—a slight improvement from recent months but still well above pandemic-era lows. Other conventional loan terms also reflect a narrowing trend: the 20-year fixed-rate averages 6.68%, the 15-year at 5.78%, and the 10-year at 5.48% [1].

Jumbo mortgages, which typically require higher credit scores and larger down payments due to their loan amounts exceeding conforming limits, have slightly higher rates. The 30-year jumbo loan averages 6.96%, while the 15-year jumbo rate is 5.89%. Meanwhile, FHA loans—designed for borrowers with lower credit scores or limited down payment capabilities—remain higher, with 30-year and 15-year rates at 7.25% and 5.59%, respectively [1]. VA loans, available to eligible veterans and active-duty service members, offer more competitive rates, at 6.22% for 30-year and 5.48% for 15-year terms [1].

The data also highlights a broader trend: while the Federal Reserve reduced the federal funds rate late in 2024, mortgage rates have remained resilient, hovering near 7% for much of the year. A slight dip occurred in February 2025, bringing 30-year rates closer to 6.5%, but they have since stabilized. As of the third quarter of 2024, 82.8% of homeowners with mortgages had rates below 6%, according to Redfin, suggesting many are still choosing to stay in their existing loans rather than refinance [1].

For homeowners considering refinancing, the decision often hinges on the potential savings from a lower interest rate. A common benchmark is that refinancing becomes worthwhile when the new rate is at least 1 percentage point lower than the current rate. For example, a borrower with a 7% mortgage might find refinancing to a 6% loan beneficial. Additionally, homeowners may choose to refinance to tap into home equity through a cash-out refinance, provided they have at least 20% equity [1].

Another compelling reason for refinancing is to adjust loan terms. Some borrowers may switch from a 15-year mortgage to a 30-year term to reduce monthly payments or shift from an adjustable-rate mortgage to a fixed-rate loan to lock in predictable payments. Borrowers with FHA loans can also consider refinancing to conventional loans to eliminate mandatory mortgage insurance payments [1].

However, refinancing is not without costs. Closing costs typically range between 2% and 6% of the loan amount, which can add up significantly. For a $300,000 loan, this could mean between $6,000 and $18,000 in fees. These costs include lender fees, appraisals, title insurance, and other charges. Therefore, it is essential for homeowners to calculate break-even points to determine whether the long-term savings outweigh the upfront expenses [1].

Homeowners also have several refinance options to consider. A rate-and-term refinance is the most common and allows borrowers to lower interest rates or shorten loan terms. A cash-out refinance enables homeowners to access equity, while a no-closing-cost refinance may offer convenience for those lacking immediate funds. Streamline refinancing, available for FHA, VA, and USDA loans, provides a faster and less-documented process [1].

While refinancing with the current lender is an option, it is advisable to shop around for the most competitive rates. Some lenders offer incentives such as reduced closing costs or lower fees, which can make a significant difference in the overall cost of refinancing. Borrowers with mortgages held by government-backed entities may also qualify for specialized programs like Refi Now and Refi Possible [1].

Source:

[1] Current refi mortgage rates report for Aug. 18, 2025

https://fortune.com/article/current-refi-mortgage-rates-08-18-2025/