Mortgage Rates Plunge to 2024 Lows, Sparking Optimism for Homebuyers

As of September 6th, 2025, mortgage rates have fallen to the lowest level since October 2024, according to data from mortgage buyer Freddie Mac. The average rate on the benchmark 30-year fixed mortgage has dropped to 6.5%, down from 6.56% the previous week.

This latest decline in rates has sparked optimism among both new buyers and current homeowners. Freddie Mac's chief economist, Sam Khater, noted that the falling rates have increased the number of homeowners who can now benefit from refinancing, with the share of refinance applications reaching nearly 47%, the highest since last October.

However, the housing affordability crisis continues to plague the market. A recent report from Realtor.com found that fewer than 30% of homes on the U.S. housing market are now affordable for the average household. In fact, the maximum affordable home price for a median-income household has fallen to $298,000, down from $325,000 in 2019, despite a 15.7% increase in median income.

This dynamic has forced many buyers to adjust their expectations, whether that means looking for smaller homes, moving farther out, or delaying their dreams of homeownership altogether. As Realtor.com's chief economist, Danielle Hale, noted, "Even as incomes grow, higher interest rates have eroded the real-world purchasing power of the typical American household."