Mortgage Rates Rise 3 Basis Points to 6.724% Amid Market Volatility

On July 9, 2025, the average interest rate for a 30-year, fixed-rate conforming mortgage loan in the U.S. rose to 6.724%, marking an increase of approximately 3 basis points from the previous day and 5 basis points from a week prior. This slight uptick in rates reflects the ongoing volatility in the mortgage market, which has seen rates fluctuate in response to various economic factors.

For 30-year conventional mortgages, the current rate stands at 6.724%, up from 6.668% a week ago and 6.862% a month ago. Similarly, 30-year jumbo mortgages saw a rise to 6.810%, compared to 6.779% a week ago and 7.115% a month ago. The 30-year FHA mortgage rate is now at 6.525%, up from 6.467% a week ago and 6.615% a month ago. The 30-year VA mortgage rate increased to 6.337%, from 6.288% a week ago and 6.515% a month ago. The 30-year USDA mortgage rate is at 6.433%, slightly down from 6.455% a week ago but up from 6.497% a month ago. The 15-year conventional mortgage rate is currently at 5.803%, down from 5.866% a week ago and 6.041% a month ago.

The recent trend in mortgage rates has been characterized by a lingering near the 7% mark, which has persisted despite the Federal Reserve's rate cuts last September. While there was a brief decline in rates before the September Fed meeting, they quickly rebounded afterward. By January 2025, the average rate on a 30-year, fixed-rate mortgage surpassed 7% for the first time since May 2024, a significant increase from the historic low of 2.65% recorded in January 2021. Experts agree that without another major economic disruption, mortgage rates are unlikely to return to the 2% to 3% range in the near future. However, rates around the 6% mark are achievable if inflation is managed effectively and economic prospects remain stable.

In early 2025, mortgage rates saw a modest decline, dropping closer to the 6.5% mark. However, this trend was short-lived, with rates rising again in early April. The current economic uncertainty, including potential policy changes and their impact on the labor market and inflation, adds to the complexity of the mortgage rate environment. Homebuyers are advised to explore options such as rate buydowns with builders when purchasing newly constructed properties to mitigate the impact of high mortgage rates.

To secure the best mortgage rate, homebuyers should focus on maintaining excellent credit, keeping a low debt-to-income ratio, and getting prequalified with multiple lenders. A credit score of 740 or higher is considered top tier and can significantly impact the interest rate offered. A low debt-to-income ratio, typically below 36%, is also crucial for securing favorable mortgage terms. Comparing offers from various lenders, including large banks, local credit unions, and online lenders, can help homebuyers find the best deal. It is essential to ensure that rate comparisons are made on a level playing field, considering factors such as mortgage discount points.

Historically, mortgage rates around 7% are not unusually high. From the 1970s through the 1990s, such rates were more or less the norm, with a significant spike in the early 1980s when rates exceeded 18%. The current high rates are a result of the economic conditions and government policies aimed at preventing recession during the pandemic. However, under more normal economic conditions, experts agree that such exceptionally low interest rates are unlikely to be seen again.

Several factors impact mortgage interest rates, including the state of the economy, inflation expectations, national debt, demand for home loans, and the Federal Reserve's decisions. Lenders raise rates to protect their profitability in anticipation of inflation, while the national debt exerts upward pressure on interest rates. The demand for home loans also plays a role, with lenders adjusting rates based on the volume of mortgage applications. The Federal Reserve influences mortgage rates through changes in the federal funds rate and its balance sheet management. The Fed's balance sheet, which includes assets like mortgage-backed securities, can significantly impact long-term financial products, including mortgages.

Comparing mortgage rates across different types of loans and shopping around with various lenders is crucial for obtaining the best mortgage. For homebuyers with excellent credit, conventional mortgages may offer the best terms. However, those with lower credit scores may benefit from FHA loans, which have more lenient credit requirements. Exploring options with different banks, credit unions, and online lenders can result in significant savings, with Freddie Mac research indicating potential annual savings of $600 to $1,200 in a high-interest rate market.