There could be a shift in mortgage rate trends soon, but homebuyers should also think twice about waiting for that to happen.
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Homebuyers who have been waiting for mortgage rates to drop have been sorely disappointed throughout the last six months. Aside from a rate spike in mid-January, where rates edged into the 7% range, they have largely remained in the high 6% range throughout 2025. But there's a chance that could change soon.
Right now, all eyes are on the Federal Reserve to see if the central bank will lower its benchmark rate at its upcoming meeting. The Fed has opted to keep rates steady recently, but plenty of homebuyers and experts alike are speculating about whether it will lower them soon. That, in turn, could have a big impact on where mortgage rates head next, but the Fed's rate decisions aren't the only factor that can impact mortgage rates.
There are plenty of other drivers behind mortgage rate trends, leaving questions about whether mortgage rates could rise or fall in August. To get more clarity, we spoke with several mortgage experts to find out how mortgage rates are expected to trend this month and what prospective borrowers can do to prepare for what's to come.
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Will mortgage rates rise or fall this August? Here's what lending experts predict
As we wait to see what will happen with mortgage rates, it's largely a wait-and-see game to see whether the Fed will lower the federal funds rate. So why hasn't the Fed lowered rates yet? That decision has been, in part, a result of the uncertainty stemming from the current administration's tariffs, according to Sarah DeFlorio, vice president of mortgage banking at William Raveis Mortgage.
"Rates ticked up a bit last week in reaction to the current administration's tariff policy and fears it will stoke inflation, but they have also responded well to favorable economic news," says DeFlorio. "It's a bit of a rollercoaster. The story continues to be about the Fed's cautious approach to inflation – concerns surrounding the unknown impacts of tariffs will keep them cautious as we head towards the end of the year."
The Fed has two primary goals with its rate decisions: maintaining maximum employment while keeping inflation in check. Hesitations about lowering the rate have largely been about fears of rising inflation. And, if the Fed hasn't lowered rates yet, it's because the central bank believes that the job market can continue to hold strong at the current interest rates, says Emmanuel St. Germain, CEO of Choice Mortgage Group.
"Although the homeowner may not agree — and we all want lower rates — until we see a break in those reports, the Fed will likely leave rates unchanged," St. Germain says.
According to St. Germain, the Fed is likely to prioritize its dual mandate of keeping inflation in check, even with the political pressure increasing. As a result, prospective homebuyers shouldn't expect August to usher in much change for mortgage rates.
"Most analysts believe we will not see any rate cuts until September, assuming the employment numbers stay relatively strong. The Fed may be concerned that lowering rates early will lead to a rise in inflation, but it's important to note the Fed is typically late to the punch bowl rather than a proactive body," says St. Germain.
That said, it's not all bad news. Many analysts expect that a rate cut is likely to come at the Fed's September meeting. So if you start preparing for your home purchase now, you might be just in time to land a lower rate.
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Is now the right time to buy or refinance a home?
If you've been waiting for a rate cut to buy a home, you might want to rethink that plan. While a rate cut could be just around the corner, it's hard to predict with any certainty when that will actually happen, and plenty of financial experts have missed the mark with rate predictions throughout 2025. So, there are no guarantees that mortgage or refinance rates will be lower one or two months from now.
Any attempt to time the interest rate market could mean waiting far longer than you hoped to buy a home, according to Sara Coers, the associate director of the IU Center for Real Estate Studies at Indiana University's Kelley School of Business in Indianapolis. And even if rates are set to drop, there's still some benefit to shopping now.
"A decline in rates will likely bring buyers back to the market and cause prices and competition to increase again," says Coers. "With rates relatively steady and the future unpredictable, there is no time like the present to buy what you can afford based on today's rates and hope for a refinance opportunity in the future."
On the other hand, if you're considering refinancing your current mortgage loan to land a better rate, you might be better off waiting. With a rate cut anticipated before the end of the year, there's a chance you may be able to get a better rate if you wait it out.
The bottom line
If buying a home is on your 2025 bucket list, it's likely been frustrating to see mortgage rates remaining fairly stable recently. And with nothing significant changing in the economy, most experts aren't predicting a Fed rate cut before August (though we may see one in September).
Rather than timing the rate market, then, it makes sense to focus on the things you can control. Getting your credit score and debt-to-income ratio in good shape and saving a large down payment can help you land the best rates currently available. And, by shopping around with a handful of lenders, you'll know you're getting the best deal.
