AMERICANS are paying nearly $1,600 less on housing costs each year as mortgage rates continue to drop, offering homeowners some financial relief.
Although an expert has warned that a few rate upticks may occur in the coming months, the outlook for the housing market is generally positive.
As mortgage rates continue to drop, homeowners are paying almost $1,600 less annually[/caption]
Mortgage rates have mostly been ticking downwards since late May, making homeownership costs more manageable for both new buyers and current owners.
The average 30-year fixed rate dropped to 6.5% on Thursday, for example – a decrease from 6.56% last week – and significantly lower than this year’s peak of 7.04% in January, per data from Freddie Mac.
Americans can see savings of up to thousands of dollars annually thanks to the downward trend in mortgage rates.
For example, based on the median US home price of $410,800, a homeowner who paid 10% down on their house in January, when the 30-year fixed rate was at its peak, would be paying a $2,470 mortgage each month.
Based on the current mortgage rates, if the same person were to make a 10% down payment on their property, they’d be spending $2,337 each month on their mortgage.
This comes out to savings of $133 per month, or $1,596 each year.
Compared with the peak rate in 2025, monthly mortgage costs have dropped by $118 per month for those with a 20% down payment, totaling just over $1,400 in annual savings for homeowners.
By the numbers
See how 30-year monthly mortgage costs vary at different interest rates:
January 2025: 7.04%
- 20% down payment: $2,195
- 15% down payment: $2,332
- 10% down payment: $2,470
Current: 6.5%
- 20% down payment: $2,077
- 15% down payment: $2,207
- 10% down payment: $2,337
Although the lowered mortgage rates may not lead to enough savings to make a home purchase affordable on its own, they can still lend homeowners a helping hand with their monthly budgeting.
Every dollar counts, especially considering that homeowners also have to shell out cash on other recurring costs like property taxes, homeowners insurance, HOA fees, and maintenance.
MONEY MOVES
Mortgage rates tend to follow the 10-year Treasury yield – the interest rate the US government pays when it borrows money for 10 years – which has dropped in recent weeks.
Investors see Treasuries as very safe, so the yield reflects the broader market’s view of long-term interest rates and inflation.
Demand for Treasuries has remained more or less stable recently, with more demand driving up Treasury prices, in turn lowering yields and reducing mortgage rates.
“We have seen that the employment sector has weakened, and there is other weaker economic data,” says Melissa Cohn, regional vice president of William Raveis Mortgage.
“At the same time, the rate of inflation has remained fairly stable in spite of the impact of tariffs. That is a perfect recipe for lower rates.”
She noted that mortgage rates do not “fall in a straight line” and “upward bumps” will likely occur as markets respond to economic and political news.
However, while mortgage rates can be tough to predict, the housing market is generally cooling from a seller-favored state to one where buyers have more power and flexibility.
National median home prices have dropped 0.2% since 2025 kicked off, per Realtor.com, meaning that it could be an ideal time for buyers to purchase a home.
Additionally, 30-year mortgage rates are expected to hover around the mid 6% range through the end of this year, according to major forecasts from Fannie Mae, the Mortgage Bankers Association, and the National Association of Realtors.
Check out why homeowners in a key US state are being forced to pay $8,000 per year after fees reach record highs.
Plus, see why US homeowners with fridges are in line for a $250 rebate check – you just need to fill out a form.
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