If you’re in the market for a home, it’s understandable to wonder when mortgage rates will go down. While interest rates might not fall all the way to 3% again, what about 4%? Even before the COVID-19 pandemic, rates lingered at or below 4%. Currently, rates are hovering around 6.5%. And while you should consider many factors when considering whether to buy a house — such as whether you can afford monthly payments and home maintenance projects — securing a low mortgage interest rate can lead to significant savings.

Read more: The best mortgage lenders right now

In this article:

Will mortgage rates go back down to 4%?

What drove 4% mortgage rates in the 2010s?

When will mortgage rates fall again?

Should you buy a house now or wait for rates to drop to 4%?

FAQs

Interest rates on 15- and 30-year fixed-rate mortgages are not likely to return to 4% anytime soon.

“We expect that mortgage rates will fall over the next five years,” said Charles Goodwin, head of bridge and DSCR lending at Kiavi, via email. “As inflation stabilizes and the Fed eventually shifts to a more accommodative stance, rates could fall slightly, although not to the previously historically low levels where they once were.”

Mortgage rates are closely tied to the 10-year Treasury yield. Lenders set rates partly based on the yield to make mortgage-backed securities (MBSs) attractive to investors. If the bond yield remains elevated, so do mortgage rates.

Keep learning: When will mortgage rates drop back to 5%?

Rates on a 30-year fixed mortgage reached 3.35% in May 2013, the lowest rates in history (at the time). These lows were brought on by the years-long response to the 2007 financial crisis when millions of U.S. homeowners faced foreclosures on their houses (many of which had subprime mortgage loans), and financial institutions collapsed.

In response to the crisis, the Federal Reserve lowered the federal funds rate to near 0%, similar to its policy during the COVID-19 pandemic. It also purchased large amounts of Treasury bonds and mortgage-backed securities, which encouraged lending and made borrowing cheaper.

The significantly reduced rates of 2010 and, more recently, 2020 were driven by major economic downturns. It’ll likely take similar seismic events to see rates drop that far again.

“Returning to a 4% mortgage rate would likely require a deep recession, a sharp rise in unemployment, and more aggressive monetary stimulus,” noted Goodwin. “The recession would need to be more severe than most forecasters' current base case.”

Dig deeper: Do mortgage rates decrease in a recession?

When deciding the right time to buy a home, it’s best to focus on your financial situation. Broader economic trends are difficult to predict and rely on several intertwining factors, but you have some level of control over your own finances.

“Trying to time the market rarely works in real estate,” said Stephen Clyde, Realtor and CEO of Stephen Clyde Real Estate Group, via email. “Over the past 75 years, U.S. home prices have only declined seven times. Plus, there are several advantages to buying now, like less competition and more room to negotiate on prices, repairs, and closing costs.”

If you’re ready to buy now, consider an adjustable-rate mortgage (ARM), a seller-paid buydown, or a shorter-term mortgage loan to keep your rate low. And remember, you can always refinance your loan later if rates drop.

Rates on ARMs can be lower than fixed mortgage rates, at least initially. However, your interest rate can fluctuate periodically based on economic conditions, so you could get stuck with a higher rate later.

With a seller-paid buydown, the seller pays money to lower the buyer's rate. It’s usually a temporary rate buydown, but it can be for the life of the loan if the seller pays for discount points at closing.

Mortgage lenders typically offer lower mortgage rates on shorter loan terms (e.g., on a 15-year mortgage versus a 30-year one). You’ll pay less in interest over time, but since you’re paying off the same principal amount in a shorter time, your monthly payments will be higher.

Regardless of your loan type, make sure you can afford the monthly mortgage payment. In addition to principal and interest, your payment can include homeowners insurance, property taxes, and private mortgage insurance, if required.

Learn more: How to get the lowest mortgage rate possible

Mortgage interest rates rose significantly in 2022 as the Federal Reserve responded to inflation. After setting the federal funds rate near 0% in the height of the pandemic, the Fed raised rates 11 times in 2022 and 2023 in an effort to slow down the economy. Raising the federal funds rate made borrowing more expensive, which impacted consumer borrowing on products like auto and home loans.

It is extremely unlikely that mortgage rates will go down to 4% in 2025. While rates may inch down, many economists expect them to stay above 6% through the rest of the year and even in 2026.

Interest rates are difficult to predict, especially further out. You’ll be hard pressed to find expert predictions extending past 2027. However, some experts anticipate future Federal Reserve rate cuts, so they expect a gradual decline in interest rates. Most expect rates to stay above 6% through 2026. These predictions can change depending on U.S. and global economic conditions and the central bank’s response.

Laura Grace Tarpley edited this article.

Mortgage interest rates change daily, meaning the mortgage interest rate you see when you first apply for your mortgage preapproval or approval may not be the same rate you end up with at closing. That’s why mortgage rate locks exist. Simply put, a mortgage rate lock freezes your interest rate until the loan closes and protects you from rising rates.

Mortgage rates have been fairly steady lately. Sure, they may increase one day and inch down the next — but there haven’t been drastic drops or spikes. When rates are stagnant, is it a good idea to lock in your mortgage rate? Or should you hold off?

Learn more: Strategies for getting the lowest mortgage rates

In this article:

What is a mortgage rate lock?

When to lock in a mortgage rate

How long can you lock in a mortgage rate?

Pros and cons

How to lock in a mortgage rate

Should I lock in my mortgage rate?

Lenders with unique rate lock programs

FAQs

A mortgage rate lock is a commitment from a mortgage lender guaranteeing that the interest rate on your home loan will remain the same until the day you close on the house — provided the mortgage closes within the specified time frame and there are no changes to your loan application. With a mortgage rate lock, the home buyer can keep the lower rate even if market rates go up.

However, if rates go down when you close on the mortgage loan, you could be stuck with a higher rate. A float-down option takes away that risk. Some mortgage lenders offer rate locks with float-down options, so you can still get a new rate if mortgage rates dip below your rate lock. It typically isn't free, though, and most lenders will charge you 0.5% to 1% of the loan amount. It will only make financial sense to exercise a float-down option if rates drop low enough to justify the cost.

The answer to when you can lock in your rate depends on the mortgage lender. Typically, you can lock in a mortgage rate at any time after you’ve been approved for the home loan and up to five days before closing. A lender might include a rate lock in the Loan Estimate, which it provides within three days before closing. Some lenders allow you to lock in a rate at other times, such as when you are preapproved.

But with all of these options, when exactly should you lock in a rate? The short answer is: Pay attention to market dynamics.

If interest rates have been stable, locking in your rate early may not be necessary. If rates are falling and are likely to continue in that direction, you may want to wait a bit before locking the rate, since you could get a better rate in a few weeks.

However, if interest rates are rising or unpredictable, and you’re worried you won’t be able to afford your mortgage with a higher interest rate, it’s worth doing a mortgage rate lock as soon as possible.

Current mortgage rates fall into that first category: stable (well, relatively). So, you may not need to rush to lock in your rate today. However, rate trends have been unpredictable overall in 2025. Keep an eye on rates, and if they start to trend upward, feel free to lock in a rate with a lender.

Dig deeper: How much house can I afford? Use the Yahoo Finance affordability calculator.

Depending on the lender, you can typically lock in a mortgage rate for 30, 45, or 60 days — sometimes even longer. As long as you close within the specified time frame, your mortgage rate won’t change.

But if your rate lock expires before you close on the loan, you’ll have to pay a fee to extend the period of time. The interest rate lock extension fee is typically a percentage of your loan amount. The longer the extension, the higher the cost.

Read more: 6 tips for choosing a mortgage lender

If you’re unsure whether locking in your mortgage rate is the right move, weigh these pros and cons to help you make an informed decision.

Protects you from interest rate hikes

You can typically choose from various lock periods, such as 30 or 60 days

Gives you peace of mind

Makes it easier to budget for your home and monthly payments since your interest rate is set

You could miss out on a lower interest rate if you don’t have a float-down option

You may have to pay extra to extend the lock after the expiration date

Many lenders charge rate lock fees

Learn more: What determines mortgage rates?

A mortgage rate lock can be helpful if market rates are trending up before your closing date. Take the following steps to lock in your mortgage rate:

Shop around. Before locking in your mortgage rate, submit mortgage preapproval applications with at least three different mortgage lenders so you can compare potential offers. Besides interest rates, you’ll also want to compare things like down payment requirements, origination fees, rate lock periods, and float-down options.

Find a home and make an offer. While many lenders allow you to lock in the mortgage rate any time after you’ve been approved for the home loan and up to five days before closing, you may have to pay extra to extend the lock if the rate lock expires before your loan closes. So, it might be best to start house-hunting and make an offer on the home you want before locking in a rate.

Contact your lender. When you’re ready for a mortgage rate lock, reach out to your lender to select the mortgage rate lock period you want and fully understand your options.

Learn more: How long does it take to close on a house?

We don’t have a crystal ball to tell you when mortgage rates will go down or whether it’s a good idea to lock in your mortgage rate today. Mortgage interest rates will likely decrease slightly in 2025, but not drastically.

Also, rates on mortgage loans aren’t moving much right now due to the political and economic climate. You may not feel the need to lock in a mortgage rate in a steady rate environment because you never know if or when rates will spike.

However, rates could spike or plummet at any point, especially with investors' uncertainty surrounding some of President Trump’s policies. That’s why it’s useful to ask potential mortgage lenders about any float-down options. You’ll pay money to activate your float-down option, but at least it gives you the option to get a lower rate even after locking one in.

Dive deeper: Mortgage rate predictions for the next five years

The best mortgage lenders offer unique rate lock programs to attract customers. Here’s how some of them work.

Newrez’s Lock & Shop Program. Newrez has a program that locks your interest rate for 45 days while you search for your new home. If rates drop during this period, the lender even lets you relock to get a lower rate at no extra cost. Read the Yahoo Finance Newrez review.

Embrace Home Loans’ two float-down options. Embrace Home Loans allows you to lower your interest rate two times instead of one, up to 15 days before closing. Each float-down option costs 0.25% of your total loan amount. Read our Embrace Home Loans review.

Navy Federal Credit Union’s Special Freedom Lock. Navy Federal Credit Union mortgages offer a float-down option called Special Freedom Lock that lets you float down twice, but the total rate reduction cannot surpass 0.50%. Navy Federal doesn’t charge any fees when you exercise your float-down option unless you extend it past the 60-day rate-lock period. Here is our Navy Federal mortgage review.

Third Federal Savings & Loan. You lock in your rate for 60 days with Third Federal mortgages. The lender even has a 360-day rate lock if you provide 1% of your loan amount up-front as a deposit. Read Yahoo Finance’s Third Federal mortgage review.

Read more: The best mortgage lenders for first-time home buyers

If you’re locked in and mortgage rates fall, you’ll be stuck paying the higher rate unless your rate lock includes a float-down option. A float-down option lets you honor your locked-in rate or the current rate, whichever is lower. This option isn’t free, though. You can expect to pay between 0.5% to 1% of the loan amount when you use a float-down. For a $350,000 loan, that's $1,750 to $3,500.

Locking in your mortgage rate is typically worth it when rates are rising or unsteady, and you want to protect yourself from paying a higher rate at closing. If mortgage rates increase after you’ve locked in the rate, you still get to keep your lower rate.

Lenders typically charge anywhere from 0.25% to 0.5% of your loan amount to lock in a mortgage rate. So, if you take out a $300,000 mortgage loan, you can expect to pay $750 to $1,500 for a mortgage rate lock.

This article was edited by Laura Grace Tarpley.

Mortgage discount points are an optional fee you can pay to lower the interest rate on a home loan.

Discount points can be a strategic financial tool for a borrower — or a misleading junk fee used by a lender.

Read more: 13 steps to buying a house

Sometimes lenders add discount points to an advertised rate to lower it and make an interest rate more attractive. If you want that rate, you'll need to pay the required points to get it.

However, it's your choice.

A better way to shop interest rates from one mortgage lender to the next is to ask them to make a loan offer based on zero discount points. Now you've stripped out the rate sweeteners and are being quoted rates you can truly compare head-to-head.

Learn more: When will mortgage interest rates go down?

It's not always easy to determine whether buying discount points makes sense. These four tips may help you decide.

A breakeven analysis compares the cost of your discount points to the monthly savings from your lower rate.

As a general rule, paying for points may be more attractive if you're planning to keep your home and your mortgage for at least a few years. That way, there's time to recoup your up-front cost.

Let's look at an example.

A discount point often lowers your interest rate by about 0.25%. On a $350,000 loan and a 6.5% interest rate, with one discount point costing $3,500, the rate would be reduced to 6.25%.

Your payment would be reduced from $2,212 to $2,155, a monthly savings of $57.

$3,500 (cost of one point) divided by $57 (monthly savings) = 61.40 months

So, your breakeven time would be just over five years.

Don't try to compare a breakeven analysis with a fixed rate to a breakeven analysis with an adjustable rate. Besides the fact that your brain might explode from layers of complexity, it really isn't a valid comparison. A variable rate will change — and you can't predict by how much or if it will be higher or lower.

You can pay for discount points up front in cash, along with your closing costs. But if your cash is limited or you're planning to pay for a lot of repairs or improvements to your home right away, you may not want to buy discount points up front.

Another option is to finance discount points as part of your mortgage, which may increase your payment or interest expense. So you're adding the cost of your discount points to your loan debt, which you will then pay interest on for the entire loan term. In that case, you're paying more interest to reduce interest. Even AI may not be able to calculate that.

You can also try to negotiate for the seller of the home to pay for discount points for you. Your success in bargaining for such a seller concession will depend on how competitive your local real estate market is — and how badly the current owner wants to sell the house.

Mortgage discount points may be tax deductible if you itemize your deductions when you file your federal income tax returns. A deduction helps you pay less in taxes. Your tax savings could be a factor in your breakeven analysis.

Paying for points may help you qualify for a larger loan amount because your monthly payment typically will be cheaper with a lower rate than it would be with a higher rate. If your income isn't high enough for you to qualify for the loan amount you want, paying points may be a solution.

But don't game yourself into being house poor. Paying to get a lower rate on a higher loan balance might not be your best wealth-building plan.

Read more: How much house can I afford? Use our home affordability calculator.

A temporary mortgage rate buydown lowers your rate for a few years. That's different from paying for points to obtain a lower rate for the full term of your loan.

A temporary buydown may save you money for a few years, but once the introductory rate expires, your payment will likely be significantly higher. This is known as "rate shock." Not a good thing. You might be able to refinance your mortgage at a lower rate, but that's a risk

“Should I buy discount points” is a question that requires thinking about your up-front and future costs, breakeven time, and more.

Consider your plans for the future and run the numbers to make sure you feel comfortable with your monthly payment before you decide to pay points — or not.

Mortgage discount points are "points" you can pay for at closing to lower your mortgage interest rate. It's common for discount points to cost around 1% of your loan amount and decrease your rate by 0.25%. Keep in mind that discount points are an optional closing cost — you can tell your lender that you do not want to pay for any.

Typically, one mortgage discount point costs 1% of the loan amount, and it lowers your interest rate by 0.25%. So, if you get a $500,000 mortgage at a 6.5% rate and buy one point, you would pay $5,000 at closing to lock in a 6.25% rate instead.

It depends on how much you are borrowing. One discount point usually costs 1% of the loan amount and lowers your rate by 0.25% — so three points would cost 3% and drop the rate by 0.75%. Let's say you take out a $500,000 mortgage loan with a 6.5% rate. To buy three points, you'd pay $15,000 on closing day, and your new interest rate would be 5.75%.

One of the most stressful parts of buying or refinancing a home is locking in a mortgage rate. Home loan rates vary depending on various factors, including your credit score, down payment size, and — this is a big one — where you live.

At the time of publication, the national average 30-year fixed-rate mortgage sits at 6.66%, according to Zillow. That figure could be slightly higher or lower, though. It depends on which state you live in and whether you want to buy a house or refinance your mortgage.

Here’s a look at the current average mortgage rates by state for 30-year fixed-rate home loans. At the time of writing, the average rate ranged from 6.56% (Montana) to 6.84% (Vermont).

Learn more: When will mortgage rates go down?

Refinance rates by state also vary, and they’re often (but not always) a bit higher than mortgage rates on home purchases.

For example, a mortgage lender may advertise higher refinance rates than mortgage purchase rates. But if you have improved your credit score, lowered your debt-to-income ratio (DTI), and accumulated a fair amount of equity since buying your home, you could actually land a lower interest rate when refinancing.

Steep competition in the housing market benefits sellers and mortgage lenders. Home buyers, however, suffer from fewer houses to choose from and higher mortgage rates if their options are limited.

If there are several mortgage lenders in your area, you could snag a better rate by forcing them to compete for your business. Try applying for preapproval with several companies to find out which one offers the best interest rate, fees, and types of mortgage loans.

Some mortgage lenders operate solely online, which costs them less money. They may pass the cost savings on to consumers. Others have physical locations to serve borrowers.

Either way, the latter results in increased operating costs, which lenders sometimes recoup by charging higher interest rates. In states where the cost of doing business is higher, above-average rates are more common.

The laws in your state, specifically those related to foreclosure, can also impact rates. Expect higher rates in states that require lenders to go through the court system to foreclose on a home, such as Illinois and Delaware.

Judicial foreclosure is costly and time-consuming for the mortgage lender. So, lenders generally increase rates to cover the risk.

The more you borrow to purchase a home, the more a mortgage lender stands to make from paid interest. Therefore, it makes sense for states with higher home prices to also charge higher interest rates. Jumbo loans, in particular, are more profitable, and lenders want to make these mortgages as attractive as possible.

Smaller mortgage loans are cheaper to process, but lenders sometimes charge more to maintain reasonable profit margins on these mortgages.

Basically, if you’re borrowing a particularly large or small amount, you may face a higher mortgage rate.

Dig deeper: What determines mortgage rates? It’s complicated.

Mortgage rates are constantly changing. They often fluctuate daily, and in some instances, rates will change throughout the day. Consult with your lender to discuss rate lock options so you’ll know when to lock your mortgage rate.

There’s no way to control the mortgage rates set by lenders, but you can position yourself to qualify for the lowest mortgage rate possible. Start by getting your finances in order, which may involve increasing your credit score (if necessary), since a higher credit score usually leads to a lower rate. You could also reduce your debt load to improve your DTI ratio. It also helps to have ample reserves that exceed the down payment amount. Most importantly, shop around and compare loan quotes before formally applying for a mortgage.

A solid refinance rate is slightly below or similar to the average rate in your state of residence. Compare rate quotes from at least three mortgage refinance lenders before applying for a loan refinance. If the rates are on the high end, consider holding off and improving your credit rating to snag a better deal in the future.

Laura Grace Tarpley edited this article.