Interest rates for refinancing drop once more - June 20, 2025
Loosening the Straps on Mortgage Rates
In another twist of financial affairs, mortgage refinancing rates loosened their grip once more on Wednesday. Dropping yet another basis point, the average 30-year refi now sits at a relatively comfy 7.08%. That's a 5 basis point decline over two days, a significant improvement compared to the May peak of 7.32% - a 10-month high.
But it's important to remember that today's rates still maintain a bit of an elevated stance when compared to the 6.71% lows seen as recently as March. Moreover, they're over a percentage point above the 6.01% recorded in September of last year - a two-year low.
A plethora of other refi rates also saw a decline on Wednesday. The 15-year refinance average dropped 3 basis points, and the jumbo 30-year average experienced a substantial 9-point drop. The 20-year refinance loans, however, remained flat.
The Nitty-gritty on Rates
Keep in mind, the rates we publish won't match the eye-catching teaser rates you see advertised online. These rates are often handpicked, showcasing the most attractive over the averages you see here. They may involve paying points upfront or may be based on a borrower with an ultra-high credit score or for a smaller-than-average loan. The actual rate you secure will hinge on your credit score, income, and more, so it could vary from the averages you see here.
Since rates can fluctuate wildly among lenders, it pays to shop around for your ideal mortgage refinance option and frequently compare rates, no matter the type of home loan you're after.
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Put our handy Mortgage Calculator to work to crunch the numbers for different loan scenarios. Your monthly mortgage payment will depend on factors such as home price, down payment, loan term, property taxes, homeowners insurance, and your loan's interest rate. Plug in the variables to get an estimate of your monthly mortgage payment.
Why Do Rates Rise and Fall?
Mortgage rates are the product of an intricate dance of macroeconomic and industry factors, including:
- The direction and level of the bond market, particularly 10-year Treasury yields
- The Federal Reserve's monetary policy, especially regarding bond purchases and funding government-backed mortgages
- The competition among mortgage lenders and across loan types
Given the simultaneous influence of these factors, it's typically tough to pinpoint a specific cause for rate fluctuations.
Macroeconomic factors kept the mortgage market relatively subdued for much of 2021. In particular, the Federal Reserve had been snapping up billions of dollars in bonds in response to the pandemic's economic pressures. This bond-buying policy often serves as a powerful influence on mortgage rates.
However, starting in November 2021, the Fed began tapering its bond purchases, making substantial reductions each month until reaching zero net purchases in March 2022.
From that time through July 2023, the Fed aggressively hiked the federal funds rate to combat decades-high inflation. While the federal funds rate may indirectly impact mortgage rates, it doesn't directly do so. In fact, the federal funds rate and mortgage rates can move in opposite directions.
The Fed maintained the federal funds rate at its peak level for almost 14 months, starting in July 2023. But in September, the central bank announced a first rate cut of 0.50 percentage points, followed by quarter-point reductions in November and December.
For its fourth meeting of 2025, the Fed opted to hold rates steady. However, it's possible that the central bank may not make another rate cut for months. At their March 19 meeting, the Fed released its quarterly rate forecast, indicating that, at the time, central bankers' median expectation for the remainder of the year was just two quarter-point rate cuts. With eight rate-setting meetings scheduled per year, that means we could see multiple rate-hold announcements in 2025.[1]
How We Keep an Eye on Mortgage Rates
The national and state averages mentioned above are provided as-is via the Zillow Mortgage API, assuming a loan-to-value (LTV) ratio of 80% (i.e., a down payment of at least 20%) and an applicant credit score in the 680-739 range. The resulting rates offer a reflection of what borrowers can expect when receiving quotes from lenders based on their qualifications, which may vary from advertised teaser rates. © Zillow, Inc., 2025. Use is subject to the Zillow Terms of Use.
Insight:Various factors, including inflation, Federal Reserve policy, bond market performance, term premium, prepayment risk, government policies, geopolitical events, credit score, down payment and loan amount, debt-to-income ratio, property type, loan term, mortgage points, and closing costs, can influence mortgage rates. These factors have a significant impact on economic conditions, financial markets, policy changes, and borrower circumstances.[1]
The drop in mortgage refinancing rates could offer an opportunity for investors to consider real-estate investments, given the potential savings on mortgage repayments. In the realm of finances, one might explore various investment options in real-estate, taking advantage of lower mortgage rates.
