Mortgage Rates Stay Elevated in August 2025 Despite Fed Rate Cuts

Mortgage refinance rates for Aug. 27, 2025, remained elevated across major loan categories, according to Zillow data cited by Fortune. The 30-year fixed-rate conventional mortgage averaged 6.62%, while the 15-year fixed-rate loan averaged 5.69%. Jumbo mortgages were slightly higher, with a 30-year fixed rate of 7.38%. FHA and VA loan rates also stayed elevated, with 30-year rates at 6.15% and 6.23%, respectively [1].

The data highlights a continued divide between short- and long-term loan rates, with 10-year conventional mortgages averaging 5.79%. This suggests that while homeowners seeking long-term stability may find little relief, those looking to shorten loan terms or reduce interest costs over a shorter period may find slightly more favorable conditions.

Market observers have noted that mortgage rates have not fallen as expected with the Federal Reserve's rate cuts late in 2024. Although rates dipped toward 6.5% by the end of February 2025, they remain significantly above the 2% to 3% rates seen during the pandemic era [1]. A Redfin report from the third quarter of 2024 found that 82.8% of homeowners with mortgages had interest rates below 6%, indicating that many are still locked into favorable terms.

Refinancing decisions continue to be complex for many homeowners due to the associated costs. Closing costs typically range from 2% to 6% of the loan amount, and refinancing is generally considered worthwhile only if the new rate is at least 1 percentage point lower than the existing rate [1]. For those considering tapping into home equity, a cash-out refinance is an option, though it usually requires at least 20% equity in the home.

Homeowners are also weighing the benefits of changing loan terms or types. For example, switching from an adjustable-rate mortgage to a fixed-rate loan or from an FHA loan to a conventional one can provide more predictable payments and potentially eliminate lifetime mortgage insurance requirements. However, shortening the loan term may increase monthly payments, which could be a barrier for some.

Refinancing options include rate-and-term refinance, cash-out refinance, no-closing-cost refinance, and streamline refinance. The latter is particularly appealing for those with FHA, VA, or USDA loans, as it simplifies the process with less paperwork [1].

Homeowners are not obligated to refinance with their current lender and may benefit from shopping around for better rates. Some lenders offer incentives such as waived closing costs for loyal customers, which could make staying with an existing lender a viable option [1].

Sources:

[1] Current refi mortgage rates report for Aug. 27, 2025 (https://fortune.com/article/current-refi-mortgage-rates-08-27-2025/)