Are mortgage rates slowly rising to 7%? And if so, how soon? The latest rate forecasts from major industry sources are in. So far, the news is good.

Learn more: The best mortgage lenders right now

The 30-year home loan rate has been in 7% territory many times over the past four years.

According to Freddie Mac, mortgage rates already edged above 7% (7.04%) for one week this year — in January 2025. They stepped over 7% for six weeks in 2024, 17 weeks in 2023, and twice in 2022.

Before that, it had been 20 years since mortgage rates were last above 7%.

The August 2025 forecast by the Mortgage Bankers Association calls for 30-year home loan rates to be near 6.6% by the end of the year. From there, the MBA expects rates to be incrementally lower — near 6.5% — through 2026. The MBA sees rates near 6.3% in 2027.

Meanwhile, Fannie Mae expects mortgage rates to end 2025 near 6.5% and 2026 at 6.1%.

And Realtor.com predicts rates to be down slightly to 6.4% by the end of this year.

So, if the forecasts hold, we may miss hitting 7% home loan rates in the near future.

Dig deeper: When will mortgage rates go down significantly?

Now, let's consider the impact of 30-year fixed mortgage rates ranging from 6%, 6.5%, and 7% on a $300,000 mortgage loan. (Numbers have been rounded to the nearest dollar.)

The difference in a $300,000 mortgage at 6.5% and 7% would mean an increase of about $100 to your monthly payment, and more than $35,000 in additional interest over the life of the loan.

Conversely, if rates were to fall from 6.5% back down to 6%, you would save about $100 a month and about $35,000 in interest.

One of the easiest and most reliable ways to track upcoming movements for mortgage rates is to follow the 10-year Treasury note. It's very much a barometer of where home loan rates are headed. You can quickly and easily check it by bookmarking Yahoo Finance’s 10-year Treasury chart.

If you see a trend of the 10-year moving lower, you can expect to see that momentum eventually transfer to mortgage rates. A pattern of higher Treasury yields? Look for mortgage rates to follow.

Why this happens: Fixed mortgage rates have a lot in common with 10-year Treasury yields. They both are long-term instruments. While a home loan is typically structured to last 30 years, U.S. homeowners typically keep a mortgage for less than 12 years. Lenders often use the 10-year as a baseline for pricing a loan by adding a profit margin to it.

It won't take much to move mortgage rates up to 7%, but here are signs for you to watch for:

As mentioned above, look for rising 10-year Treasury bond yields.

Watch for news of increasing consumer costs, whether from tariffs or otherwise. That would be termed "rising inflation."

Listen for talk of higher government debt. This will often be characterized as increasing "deficit concerns."

Monitor investor enthusiasm regarding stocks. In a rising stock market, traders often leave bonds behind. In a bond market sell-off, yields rise.

Learn more: How are mortgage rates determined?

With rates so close to 7% already, a move over the line can happen quickly. With the right combination of circumstances, we could be just four weeks away from 7% mortgage rates. That's how long it took for rates to climb from 6.72% to 7.04% back in late December to mid-January.

Or, we could be just eight weeks away from a mortgage rate close to 6% as happened in August, September, and October 2024.

Mortgage rates are unpredictable like that.

Keep reading: What happens if mortgage rates go up to 8%?

It is if you have 3% mortgage rates ingrained in your mind. However, the average mortgage rate over the past 54 years is 7.71%. Of course, that's like comparing the average cost of a gallon of milk over 50 years, which was $1.57 in 1975 (not adjusted for inflation), and is around $4 today. When buying a house today, you probably don't care what prices and interest rates were 50 years ago. Still, no — 7% is not a particularly high mortgage rate.

Mortgage rates reached historic lows of sub-3% in the height of the COVID-19 pandemic and prolonged economic stress. A similar national financial shock might be what it takes to bring 3% home loans back.

No official source, such as Fannie Mae, Freddie Mac, or the Mortgage Bankers Association, dares to make predictions that far out into the future. However, Yahoo Finance has put together a mortgage rate five-year forecast based on 10-year Treasury rate expectations. It shows surprisingly little movement in home loan rates over that period.

Laura Grace Tarpley edited this article.

Mortgage rates are stuck in a rut, and expectations for a little monetary assistance are pushed back to mere days before the official start of fall. At its July 30 meeting, the Federal Reserve once again left short-term interest rates unchanged. Wall Street isn't expecting a rate cut until September at the earliest. That means mortgage rates won't make any big moves downward anytime soon. Until market forces influence interest rates to fall, you'll need to work the system to get the lowest mortgage rate you qualify for. Here's how.

Learn more: How the Fed rate decision impacts mortgage rates

Analysis by Yahoo Finance of nearly 5,000 mortgage lenders reporting 2024 loan information under the Home Mortgage Disclosure Act reveals the surprising truth: the lenders offering the lowest mortgage rates.

Unfortunately, the results won't help the typical borrower.

By and large, the mortgage lenders who offered astonishing, rock-bottom mortgage rates made a tiny number of loans — no doubt allowing drastic rate concessions to a small slice of preferred customers. We're talking median interest rates from 2.4% to 4.75%, which are made by lenders underwriting loans to as few as a handful of customers.

Other lenders offering the absolute lowest mortgage rates in 2024 were banks catering to select clientele, credit unions serving local members, and homebuilders financing their own construction.

So, what if you aren't buying new construction from a lender offering a buydown, a member of a credit union willing to offer below-market-rate loans, or an affluent investor with a million-dollar portfolio?

Here are eight strategies to get the lowest mortgage rates with the cheapest home loan you can qualify for — all while using a regular, more well-known mortgage lender.

You may already know that mortgage rates vary by credit score. Whenever you boost your credit score from a lower to a higher tier, you save money.

For example, the entry-level FICO Score of 620 might earn you an annual percentage rate, or APR, of 7.896% (based on mortgage rates as of July 16, 2025, with the purchase of one discount point). Raise your score to the next credit band of 640 to 659, and your interest rate could improve to 7.145%.

Bigger rate discounts are offered as you climb the credit score ladder. Here are the interest rate breaks as shown by MyFico.com's Loan Savings Calculator:

Read more: What credit score do you need to buy a house?

The amount of recurring monthly debt you carry when applying for a mortgage is another significant factor in the interest rate you'll earn. The more debt, the higher your mortgage rate.

To get the lowest mortgage rate, aim for a DTI of 25% or less. To calculate your debt-to-income ratio, divide your total monthly debt by your monthly income before withholdings. For example, say you need $700 for monthly rent, $300 for a vehicle loan, and $100 in student loan payments. That's $1,100. With a monthly gross income of $5,000, your DTI is 22%.

1100 / 5000 = 0.22

You're in the pocket for a lower mortgage rate. Mortgage lenders may consider DTIs up to 50%, but prefer 35% or less — and the lowest mortgage rates go to borrowers with DTIs of 25% or less.

Another best practice for getting the lowest mortgage rate is to make as much of a down payment as you comfortably can. While you can get a home loan with as little as 3% down, paying more upfront will earn you a lower mortgage rate.

For first-time home buyers, the median down payment was 9% in 2024, according to the National Association of Realtors.

Prepaying interest to lower your ongoing mortgage rate, called buying discount points, gains popularity in times of higher interest rates.

Buying one point equals 1% of the loan amount and will generally reduce your interest rate by one-quarter of a percentage point. Any number of points can be purchased and applied in fractional amounts too.

However, it's a good idea to calculate the up-front cost of buying points and compare that with the discount you receive on your long-term interest rate. Other factors to consider in this calculation include how long you expect to live in the home and your down payment.

Lenders sometimes add a point or two to a mortgage proposal to make their offered interest rate appear more enticing. But remember, you're actually paying for the discount with an up-front fee.

When shopping for a loan, compare loan offers with zero points. Then, you can decide how many points to buy, if any, to lower your interest rate.

Here's a surprising fact: In a Zillow survey of home buyers over seven months of 2024, about 45% obtained a mortgage rate below 5% — when rates were above 6.5%, like they are now.

How? One-third were successful in negotiating special financing with the home seller or builder. More than one-quarter got a rate buydown from the seller or builder (see below). Nearly a quarter (23%) bought discount points, as we've just mentioned.

If mortgage rates are near 6% and you want to get below 5%, you'll need to buy four to five discount points. (Remember, each point you buy reduces your interest rate by approximately a quarter of a point.)

For example, one point on a $300,000 mortgage would equal $3,000. If you want to purchase five points, you'll likely pay $15,000. You will want to discuss your point-buying strategy with your lender to ensure it gets your long-term loan rate to your target.

Borrowers can lower their mortgage interest rate for the first few years of the loan term with a buydown. Home builders, sellers, and some lenders sometimes offer an interest rate buydown to boost sales. However, it is a rare option among mortgage lenders.

For national mortgage lenders with buydown programs, check out Guild Mortgage and AmeriHome Mortgage.

For example, a buydown might lower your interest rate from 7% to 6.5% for two years. It can be a good deal if the company offering the buydown isn't making it up with fees somewhere else.

While you get a short-term break on the interest rate, your payments and total interest may actually be higher over the long term. Buying down your interest rate is a strategy that requires running the numbers on the long-term benefits.

If you're interested in a buydown, compare a mortgage both with and without a buydown. Lenders will qualify you based on the permanent interest rate, not the temporary buydown rate. Finally, be prepared for your monthly payment to rise at the end of the buydown’s discount period.

A mortgage product that increases in popularity whenever rates begin to rise is back: the adjustable-rate mortgage.

ARMs have a fixed interest rate for an introductory period, often three to 10 years, and then the rate changes regularly, usually once or twice a year. Tips when shopping for an ARM:

Look for an introductory rate that is lower than a fixed-rate mortgage.

Choose a term you feel comfortable with, perhaps in line with how long you plan to stay in the home.

Make sure you budget for possible increases in your monthly payment if the interest rate moves higher after the end of the introductory fixed-rate period.

In the past, it was common to find ARMs with introductory rates well below the prevailing long-term fixed interest rate. An ARM could be a good idea today, but the intro rate isn't always lower anymore. You'll have to shop diligently — and bravely negotiate.

Dig deeper: Adjustable-rate vs. fixed-rate mortgage — Which should you choose?

Are you looking for an interest rate that never changes and allows you to build home equity faster? Consider a shorter-term loan. Mortgages with 20- or 15-year fixed terms, as opposed to the traditional 30-year term, typically come with lower interest rates.

However, since the term is shorter, monthly payments tend to be higher.

Keep learning: 15-year vs. 30-year mortgage — How to decide which is better

An assumable mortgage allows you to take over the remaining payments of an existing home loan. You would likely make a lump sum payment to the current owner to cover the value of any equity or for a profit. That would require you to have the needed cash on hand or perhaps get a loan.

As tempting as it might be to pick up a low-interest-rate assumable loan, most conventional mortgages aren't eligible. That means you would need to find a seller with an FHA, VA, or USDA loan.

Read more: Mortgage rate predictions for the next five years

Since mortgage rates are constantly changing, and each lender's rate varies, the lowest mortgage rate you can earn requires some research. You will want to know your credit score, debt-to-income ratio, and the amount of your down payment.

With that information, you can begin contacting lenders. Knowing generally where you want to buy a house and how much it will cost, you can gather rate estimates based on your creditworthiness.

Once you have two or three contenders, you can apply for preapproval with each and get a more exact mortgage rate.

Learn more: 6 tips for choosing the right mortgage lender

Current home loan interest rates are well above 6%. Many (72.1%) of existing homeowners have a mortgage rate below 5%, and over half (54.1%) have a rate below 4%, according to Realtor.com. So, refinancing is not an option for many homeowners right now.

However, owning a home is a long-term commitment, and mortgage rates are very cyclical. Just because mortgage rates are above historic lows doesn't mean a refinancing opportunity will not present itself some years down the road.

After you move in, keep an eye on interest rates. Look for a dip of about 1% to 2% below your current mortgage rate before refinancing. Just remember — there will be refinance closing costs, and you need to decide if your goal is to lower your monthly payment or to pay off your home sooner.

Dig deeper: 6 times when it makes sense to refinance your mortgage loan

The lowest mortgage rate ever on a 30-year loan was 2.65% in January 2021, according to Freddie Mac. It takes dramatic and systemic financial stress to shock mortgage rates to such a low level. COVID-19 was just that. Some 15 months later, mortgage rates were up to 5%.

Never say never — but it's unlikely that mortgage rates will go back down to 3%. A drastic event (like the COVID-19 pandemic) would have to occur again for rates to drop this low.

VA loans, especially 15-year VA loans, usually have the lowest mortgage rates because shorter terms have lower rates than longer terms.

Laura Grace Tarpley edited this article.

It's overwhelming to be a first-time home buyer. Buying a house in 2025 takes a series of savvy financial moves, and you'll need a mortgage lender who can be a true partner in the process. Not a knock-it-out, "Who's next in line?" provider, but a lender with deep resources and loan options that can make your homeownership dream come true.

Yahoo Finance has analyzed leading mortgage lenders, considering important aspects of the loan process, such as average mortgage rates and total costs, and used this data to create the ultimate "best of" list for August 2025 — without conflicts of interest or compromise.

The Yahoo view: Truist distinguishes itself with down payment assistance and lender credits, among other first-time home buyer advantages. However, it has a below-average score for customer satisfaction.

Read our full Truist mortgage review

Key benefits

A Community Homeownership Incentive Program offers low or no down payments, lender credits, and no mortgage insurance to eligible borrowers in qualifying areas.

Medical professionals may qualify for lower down payments, waived mortgage insurance, and the exclusion of student loans from debt-to-income requirements with Truist mortgages.

Need to know

Published mortgage rates default to one discount point to show a more favorable interest rate but can be adjusted to zero points.

Scores below the average for customer satisfaction, according to the latest J.D. Power Mortgage Origination Satisfaction Study.

The Yahoo view: NFCU offers several distinctive benefits, including interest rate protection on VA-backed mortgages for active and former military members. Although it has our highest star rating, it is specifically best for military-affiliated first-time home buyers.

Read our full Navy Federal Credit Union mortgage review

Key benefits

The Special Freedom Lock allows an interest rate reduction of up to 0.50% if mortgage rates move lower before your loan closing — just one reason why NFCU is on Yahoo Finance's list of the best VA lenders.

The No-Refi Rate Drop allows you to tap a lower interest rate six months or later after closing — for a $250 fee but without changing your loan terms or taking on additional closing costs as you would with a refinance.

A rate guarantee states that Navy Federal will match a better mortgage rate offered by a competing lender or pay you $1,000.

Military Choice loans allow benefits similar to VA mortgages to current and former service members without further entitlements.

Buy your home through a Navy Federal real estate agent partner and receive $400 or more cash back.

Need to know

Navy Federal Credit Union home loans are available to members only. Eligibility includes active duty or former members of the armed forces, Department of Defense or National Guard and family or household members.

Ranks above the average of all the lenders considered in the latest J.D. Power Mortgage Origination Satisfaction Study.

The Yahoo view: TD Bank excels in home loan selection with the broad selection of products typical of a depository institution. However, its services are only available in just over a dozen states.

Read our full TD Bank mortgage review

Key benefits

TD Bank mortgage punches above its weight. Only a short list of mortgage loans is unavailable.

Offers a comprehensive selection of educational resources for borrowers, including calculators.

Fee discounts are available to existing TD customers.

Need to know

Individualized rates are available by filling out a simple online form.

Serves 15 states (CT, DE, FL, MA, MD, ME, NC, NH, NJ, NY, PA, RI, SC, VA, VT) plus Washington, D.C.

Dig deeper: How to choose a mortgage lender

The Yahoo view: Chase Bank offers a wide assortment of home-buying tools, including nearly a dozen calculators, plus videos, checklists, FAQs, and more.

Read our full Chase mortgage review

Key benefits

Chase has an abundance of online learning resources, which are perfect for guiding a first-time home buyer through a complicated process.

Chase offers a $5,000 guarantee to close a home loan as quickly as in three weeks under specific guidelines.

VA loans may be eligible for a credit of up to $2,000, which you can apply to closing costs.

Need to know

Chase has an above-average rating for customer satisfaction, according to the 2024 J.D. Power study.

The conventional loan interest rates on the Chase website are enhanced with strict credit standards, including 20% to 25% down payments, one discount point, and borrowers with "excellent" credit. In other words, the rate you earn could be much different.

The Yahoo view: Better offers several home-buying services, including rapid loan approval, insurance, real estate attorneys, settlement services, and more, as part of a consolidated digital experience — making it our top online mortgage lender.

Read our full Better Mortgage review

Key benefits

A "One Day Mortgage" offer promises a loan commitment within 24 hours of submitting paperwork and a rate lock.

Better Mortgage claims to close loans "17 days faster than the industry average."

A full-service digital experience includes loans, insurance, real estate attorneys, and settlement services.

Need to know

Published interest rates are shown for borrowers with a 20% down payment, who pay closing costs with cash, have a DTI below 35%, and a credit score of 760 or higher.

Mortgage rates are also lowered with two or more discount points.

The Yahoo view: Best-in-class for customer satisfaction, Bank of America also offers a full suite of loan products.

Read our full Bank of America mortgage review

Key benefits

Bank of America is near the top of customer satisfaction rankings in the latest J.D. Power survey.

Offers grants up to $7,500 in closing costs and down payment assistance up to $10,000 for qualified buyers in many, but not all, states.

Existing customers may qualify for an origination fee or interest rate deduction. You'll likely have to sign up to draft your mortgage payments from an account to qualify.

A home buyer program for medical professionals allows borrowers to make lower down payments and exclude student loans from debt limits. Residents and fellows can also close on a loan 90 days before starting a new position.

Need to know

Bank of America's Real Estate Center features home listings, including existing and new construction properties — as well as bank-owned houses.

The Yahoo view: Pennymac is a major lender for loans insured by the FHA (Federal Housing Administration) and is well-equipped to guide first-time homebuyers through the government loan process.

Read our full Pennymac mortgage review

Key benefits

Pennymac is the second-largest FHA lender by loan volume in the nation — and is rated by Yahoo Finance as the best overall FHA lender.

Offers a rate buydown that lowers your interest rate by 1% for one year.

Show sellers you are a serious and qualified buyer with Pennymac's BuyerReady Certification. You will also receive a $1,000 credit to apply to your closing costs.

Use a real estate agent endorsed by Pennymac and get from $350 to $9,500 cash after closing.

Need to know

Pennymac has a well-below-average rating for customer satisfaction, according to the 2024 J.D. Power Mortgage Origination Satisfaction Study.

The Yahoo view: Citibank is a legacy mortgage loan lender with grants up to $7,500 to apply to closing costs.

Read our full Citibank mortgage review

Key benefits

Citi offers a 3% down payment program with no private mortgage insurance (PMI) requirement to borrowers in specified U.S. cities.

Citi’s Lender Paid Assistance Program can cover up to $7,500 in closing costs to qualified buyers.

Need to know

Advertised mortgage rates include substantial discount points and undisclosed credit score requirements.

A Yahoo Finance analysis of HMDA data revealed that Citi charged well-below-median mortgage interest rates in 2023 with average loan costs.

The Yahoo view: An early-mover in digital mortgages, Rate (previously Guaranteed Rate) offers face-to-face service in many markets but is rated well below J.D. Power’s average in customer satisfaction.

Read our full Rate (Guaranteed Rate) mortgage review

Key benefits

For a personal service option, Rate has hundreds of branch locations across the nation.

A "Same Day Mortgage" promises loan approval — but not loan funding — within 24 hours of locking an interest rate and submitting financial documents.

Offers non-qualified mortgages for self-employed borrowers or those who want to qualify using alternative credit standards.

Need to know

Advertised rates factor in more than one discount point, are based on a 20% down payment, and a FICO score well above the national average.

Rate scores well below average in customer satisfaction, according to the latest J.D. Power Mortgage Origination Satisfaction Study.

Read more: How to get a mortgage when you're self-employed

The Yahoo view: Has made a commitment to offer down payment assistance and closing costs credits to advance homeownership for minorities.

Read our full U.S. Bank mortgage review

Key benefits

Has committed $100 million over five years to offer up to $12,500 in down payment assistance and up to an additional $5,000 in a lender fee credit to advance homeownership for minority families.

Existing U.S. Bank customers may be eligible for a credit against closing costs up to $1,000.

A prequalification process is free, "takes five minutes," and does not impact on your credit.

Need to know

A loan application can be made in a loan officer's office, by phone or online.

U.S. Bank's mortgage rates, as published on its website, look appealing. However, the conventional loan rates shown require a down payment of 25% and a FICO score of 740 or better. That's well above the national average credit score of 715.

Many mortgage lenders offer conventional loans backed by Fannie Mae. With the HomeReady program, you only need a 3% down payment and 620 credit score. You also might qualify with a debt-to-income ratio as high as 50%.

You must finish a home-buyer education course to qualify for this program, which is often useful for first-time buyers.

Conventional loans backed by Freddie Mac also require a 3% down payment and an online home-buyer education course. The main differences from the HomeReady program are that Home Possible loans require a 660 credit score and a 45% DTI ratio for buying a house.

FHA loans can be great for first-time home buyers because you can qualify with a 580 credit score and 3.5% down payment. (You can even get an FHA loan with a score as low as 500, but you'll need 10% down in this case.)

VA loans are for eligible active military personnel, veterans, and their families. They're great mortgages for getting your foot in the door of homeownership because you don't need a down payment. The U.S. Department of Veterans Affairs also doesn't set a minimum credit score, so you can shop for lenders that accept low scores if that's an issue.

You also don't need a down payment for USDA loans. These mortgages are for low-to-moderate-income borrowers buying in rural and suburban areas. As with VA loans, the U.S. Department of Agriculture doesn't set a minimum credit score, so the credit score needed will depend on the lender.

We seriously considered the following mortgage lenders with first-time home buyer loans for our best-of list, but they weren’t quite as strong as our top picks:

American Pacific Mortgage

AmeriHome Mortgage

AmeriSave Mortgage

BMO mortgage

Cardinal Financial mortgage

Carrington Mortgage Services

Citizens Bank mortgage

CMG Financial mortgage

CrossCountry Mortgage

Embrace Home Loans

Fairway Independent Mortgage

Fifth Third Bank mortgage

Flagstar Bank mortgage

Freedom Mortgage

Guild Mortgage

Huntington mortgage

loanDepot

Movement Mortgage

Mr. Cooper mortgage

New American Funding

Newrez mortgage

PenFed Credit Union mortgage

PHH Mortgage

Planet Home Lending

PNC Bank mortgage

Prosperity Home Mortgage

Regions Bank mortgage

Rocket Mortgage

SoFi mortgage

Third Federal Savings & Loan mortgage

USAA mortgage

Veterans United

Wells Fargo mortgage

An FHA loan is often the best type of loan for first-time home buyers because you only need a 580 credit score and a 3.5% down payment (or a 500 credit score with 10% down). It also allows borrowers with more debt to buy a home than many other types of mortgages. These features are great for first-time buyers who may not have much money saved or haven't had time to build up their credit yet. However, a conventional loan could be good if you're a first-time buyer with a strong credit score and lower debt levels, because many lenders only require 3% down.

First-time home buyers should look into three government-backed home loans: FHA, VA, and USDA loans. FHA loans are geared toward people with higher debt levels and lower credit scores. VA loans are for military-affiliated buyers who don't have any money for a down payment. USDA loans are for lower-income homeowners buying in rural areas and also don't have any money for a down payment. But conventional loans are still great mortgage options for first-time buyers with 620 credit scores and 3% down.

The best bank (or mortgage lender) will depend on your situation, but we chose Truist Bank as the best lender for first-time home buyers overall. It offers benefits for first-time buyers such as down payment assistance and lender credits.

You can put down as little as 0% as a first-time buyer getting a VA loan or USDA loan. You can also put down 3.5% for an FHA loan. Depending on the lender and how strong your finances are, you may be able to put down as little as 3% with conventional mortgages.

A 30-year mortgage term is usually best for first-time buyers. All common types of mortgage loans offer a 30-year option, and it has lower monthly payments than, say, a 15-year mortgage.

As a first-time home buyer, a 620 credit score is preferable. You can qualify for a conventional mortgage with most lenders with a 620 score. However, FHA loans are often good deals for first-time buyers who might not have had time to build strong credit yet — FHA loans only require a 580 score.

An FHA mortgage is usually the easiest type of loan to get approved for because it has relatively lenient credit score requirements. But if you're affiliated with the military and are eligible for a VA loan, you'll likely be approved because the VA doesn't set a minimum credit score — the requirement varies by mortgage lender.

Methodology:

Yahoo Finance reviews and scores mortgage lenders with quintile scoring in five primary categories: 1) Interest rates. Using 2023 Home Mortgage Disclosure Act data comprised of 10 million home loan applications, we score mortgage lenders on issued mortgage rates below or above the annual median of reporting lenders. 2) Affordability. A measure of loan product availability and the willingness of a lender to offer government-backed loans, low down payments, down payment assistance, and consideration of nontraditional credit. 3) Loan costs. HMDA data is again analyzed, and lenders are rated based on total loan costs compared to the annual median. 4) Rate transparency. The ability of a website user to obtain a mortgage interest rate estimate. We score lenders based on whether rates are enhanced with discount points or high credit score requirements, disclaimers revealing rate assumptions, sample advertised rates, and whether adjustable or no discount point rate estimates are available. 5) Online features. An analysis of the educational material, calculators, and additional resources available to users.

Review of Nationwide Multistate Licensing System (NMLS) data on regulatory actions can trigger a penalty to the score of any lender with a consumer mortgage-related administrative or enforcement action within the past five years.

Advertisers or sponsorships do not influence ratings.

Editorial disclosure for mortgages:

The information in this article has not been reviewed or approved by any advertiser. The details on financial products, including interest rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the lender's website for the most current information. This site doesn't include all currently available offers.

This article was edited by Laura Grace Tarpley.

Home buyers and potential loan refinancers have been pinning their hopes on a return to mortgage rates in the 3% range. However, with home loan rates remaining close to 7% for nearly three years, perhaps 5% is becoming a more reasonable possibility for 30-year fixed mortgages.

Most housing experts aren't expecting rates to move much lower through the end of this year. However, a major economic setback could trigger much lower mortgage rates.

So, expect rates to be mostly unchanged. But prepare for 5% mortgage rates.

Learn more: How to buy a house in 13 steps

What would trigger lower mortgage rates? Realtor.com chief economist Danielle Hale said it's a matter of time.

"The most likely catalyst is time. As time goes by, as you get closer to that 2% inflation anchor that the Fed is targeting, it would normalize the (Federal Funds rate) and it would normalize longer-term interest rates," Hale told Yahoo Finance. "The federal rate would probably get back into the 2-1/2% range or so, which is probably enough to bring long-term yields back around 4%, and that would probably put mortgage rates in the 5-1/2 to 6% range."

She noted that Federal Reserve rate cuts and lower mortgage rates are not a one-for-one proposition. Hale said that from last September through January, the Fed cut its benchmark rate by a percentage point, and mortgage rates rose by almost the same amount.

The Federal Reserve has delayed rate cuts this year. With no Fed meeting scheduled in August, Wall Street has high expectations for a quarter-point interest rate cut in September.

Learn more: How the Fed rate decision impacts mortgage rates

"You could get [to 5% mortgage rates] faster if you were to have a recession," Hale added. "That could cause the Fed to cut rates, and you could see 5 1/2% — maybe even slightly below 5 1/2%, in a really bad recession."

Even though the latest GDP report indicated that the U.S. is not in a recession, the most recent employment data is fanning the flames of recession fears.

Realtor.com research conducted in the first quarter of 2025 found that roughly three in 10 (29.8%) of potential home buyers surveyed said a recession would make them at least "somewhat more likely" to buy a home.

"It seems that some shoppers are anticipating either lower mortgage rates or lower home prices, or both, in a recession to potentially create some sort of opportunity for them to buy," Hale said.

Of course, a recession could bring many complications into the affordability equation: job and income insecurity among the most likely.

Dive deeper: Do mortgage rates decrease in a recession?

If mortgage rates fall into the 5% range, Hale believes it would bring buyers and sellers back into the market. But would a resurging market introduce more competition for buyers?

Hale said that while home buyers are looking for lower mortgage rates, home sellers are too. Listings may increase as sellers see an opportunity to move into their next house at a reasonable interest rate.

"When rates drop, normally that would increase competitiveness in the market because it creates opportunities for home buyers. But I think, interestingly, this will also create some opportunities for home sellers, so we might not see competitiveness pick up quite as much."

Read more: You locked in a low mortgage rate — now you want to move. What should you do?

The window for lower mortgage rates may open quickly — and perhaps close just as fast. As a borrower and home buyer, you'll want to be prepared.

Have your down payment in the bank. When an opportunity to buy presents itself, you'll have the funds ready to take action. Have enough for closing costs too.

Check your credit score and get your personal finances in shape.

Nail down your home price range and target monthly payment. Knowing how much house you can afford and narrowing down the appropriate neighborhoods can set you up for early success when the time is right.

Explore a prequalification. Talk to a few mortgage lenders and have your home loan options lined up. You can have the lenders in your pocket for when it's time for an official loan preapproval.

Learn more: Mortgage rate projections for the next five years

It's not a common prediction among industry observers, but one expert believes so. Chris Whalen, an investment banker in New York, told Yahoo Finance in a phone interview that 5% is likely the next move for mortgage rates. "If you really wanted to put me on the spot [and ask me] 'how low do you think mortgage rates will go in the next cycle?' I'd say 5%."

It’s unlikely that mortgage rates will fall to 4% anytime soon. Unusually low mortgage rates only became possible following the 2008 housing crisis and the ensuing recession. Then, the COVID pandemic tamped them down even further. It was a rare set of circumstances that pushed mortgage rates to historic lows. It would likely take equally unusual events to cause such low rates to happen again.

The average 30-year mortgage interest rate dipped into the lower 5% range for about six weeks in the summer of 2003. Then again briefly in March 2004. A longer stretch of mortgage rates near and well below 5% began during the housing crisis and recession of 2008 and lasted 14 years, ending in October 2022.

Probably not, on the Fed's current schedule. It would likely take an economic reversal, spurring further federal funds rate cuts, to get mortgage loan rates close to 5%.

Buy a home when you can afford to. A mortgage rate is not a lifetime commitment. It's likely you'll own more than one house, and even if you buy at a higher rate now, you can always refinance when rates come down.