Fixed Mortgage Rate: How New Policies Reduce Financing Costs

The Trump Effect on the Mortgage Market

Recent initiatives by the Trump administration are having a significant impact on the American mortgage landscape. Two key proposals—one that limits institutional purchases of single-family homes and another that encourages Fannie Mae and Freddie Mac to expand their purchases of mortgage-backed securities—have contributed to pushing down borrowing rates. The most tangible result? Costs for those seeking mortgage credit have finally fallen below the 6% threshold.

The Current Scenario: Where Are Rates?

According to the latest Zillow data, the mortgage rate landscape shows an interesting variation across different products. For those who prefer the certainty of a fixed 30-year mortgage rate, the national average stands at 5.91%, while those opting for a 15-year term benefit from a lower rate of 5.36%. Adjustable-rate options (ARM) remain slightly higher, with the 5/1 ARM reaching 6.17%.

Complete Overview of Borrowing Rates

• Fixed 30-year mortgage rate: 5.91%
• Fixed 20-year rate: 5.83%
• Fixed 15-year rate: 5.36%
• 5/1 ARM: 6.17%
• 7/1 ARM: 6.36%
• VA 30-year loans: 5.57%
• VA 15-year loans: 5.21%
• VA 5/1 loans: 5.36%

Refinance Costs: A Necessary Comparison

For those considering refinancing an existing mortgage, rates are slightly higher compared to new loans. According to Zillow, the fixed 30-year refinance rate hits 5.99%, while the 15-year version stands at 5.43%. This difference reflects a common market dynamic, though it is not a universal rule.

Current Refinance Rates

• Fixed 30-year: 5.99%
• Fixed 20-year: 5.75%
• Fixed 15-year: 5.43%
• 5/1 ARM: 6.39%
• 7/1 ARM: 6.49%
• VA 30-year loans: 5.46%
• VA 15-year loans: 5.13%
• VA 5/1 loans: 5.44%

Three Strategies to Choose the Right Mortgage

The 30-Year Fixed-Rate Mortgage: Stability and Predictability

Opting for a 30-year fixed-rate mortgage provides long-term financial clarity. Monthly payments are significantly lower compared to shorter-term loans, and the amount remains unchanged throughout the entire term, protecting against market fluctuations. Of course, this advantage comes with a trade-off: the total interest paid is higher since the loan is amortized over three decades and the offered rate is generally higher than shorter terms.

The 15-Year Fixed-Rate Mortgage: Savings vs. Higher Payments

The shorter alternative presents the exact opposite profile. Those choosing this option face higher monthly payments but benefit from a lower fixed mortgage rate and, most importantly, pay off the debt in half the time, generating substantial savings on total interest. The decision depends on the ability to sustain larger payments in the coming months.

Adjustable-Rate Mortgages (ARM): Opportunities and Risks

ARM loans start with a fixed period during which the rate remains locked—for example, five years for a 5/1 ARM—after which periodic adjustments occur. The main attraction is the particularly advantageous introductory rate, which results in lower initial payments. The downside is future volatility: once the fixed period ends, payments could increase unpredictably. However, for those planning to move before the adjustment period begins, this solution offers an opportunity to maximize initial savings.

Is It Worth Buying a House Now?

Compared to recent times, current conditions are favorable. Housing prices have slowed their pandemic-driven surge, introducing greater market stability. For those considering a transaction in the short to medium term, this is a relatively positive environment. However, the ideal time to buy remains subjective and closely tied to personal circumstances. Trying to time the real estate market perfectly is as complex as in the stock market—prioritizing what works best for your specific situation is key.

Common Questions About Mortgage Rates

What is the current 30-year fixed mortgage rate?

Zillow reports a national average of 5.91%. It’s important to note that rates can vary between sources due to different data collection methodologies. Zillow uses information from its own credit marketplace, while Freddie Mac relies on actual loan applications. Geographically, state of residence, ZIP code, chosen lender, and loan type significantly influence individual rates, making it advisable to compare multiple offers.

Do we expect rates to decline in the coming months?

Analysts hold differing outlooks. The Mortgage Bankers Association predicts the 30-year fixed mortgage rate will stabilize around 6.4% by 2026, while Fannie Mae anticipates it remaining above 6% throughout 2025, with a possible dip to 5.9% in Q4 2026. Sharp reductions do not seem imminent in the short term.

Are borrowing rates trending downward?

Since late May, a gradual decline has been evident. The 30-year fixed mortgage rate peaked above 7% earlier this year, remained volatile in the following months, then began a slow decrease from 6.89% toward late May.

How to get the best rate when refinancing?

The strategy is similar to that for a new purchase: focus on improving your credit score and reducing your debt-to-income ratio (DTI). Choosing a shorter loan term can also help secure better conditions, though it results in higher monthly payments.