Mortgage Rates Have Dropped.
Here’s What That Means for You.
October 2025
Mortgage interest rates recently fell to their lowest levels of 2025. According to Mortgage News Daily, the average rate for a new 30-year fixed-rate mortgage hit 6.39% on September 25, down from a 2025-high of 7.26% in January 2025. So, what does this news mean for you?
The Impact of Lower Rates
Lower mortgage rates are good news for homebuyers and homeowners because they can provide more buying power, lower monthly mortgage payments, and more opportunity to put home equity to work.
- Homebuyers may now qualify to purchase homes for lower monthly payments or higher purchase prices than before
- Homeowners may now qualify to refinance their mortgages to lower rates and monthly payments or convert home equity into cash at lower rates than before
How much of a difference does the recent rate drop make? Generally, the larger the loan amount, the greater the potential savings from a lower rate will be. The example below shows the difference between identical $300,000 loans with 7.25% and 6.25% rates.
Example Loan Comparison* | ||||
Interest Rate | Loan Amount | Monthly P&I Payment | Monthly P&I Savings | Yearly P&I Savings |
7.25% | $300,000 | $2,047 | – | – |
6.25% | $300,000 | $1,847 | $200 | $2,400 |
As the example shows, obtaining the loan with the lower interest rate could provide principal and interest savings of about $2,400 a year. For a homebuyer, this would be pure savings over the higher-rate loan.
For a homeowner considering refinancing their current loan, it’s important to confirm that the expected savings exceed the expected closing costs on the new loan. One rule of thumb says that if a homeowner can reduce their mortgage rate by at least one percentage point, they should consider refinancing. Even a rate improvement of 0.75 points or lower may be worthwhile in some situations.
Be Wary of Offers from Online Lenders
Because of the recent rate drop, more people are exploring buying or refinancing a home. As a result, many mortgage lenders are soliciting homebuyers and homeowners with offers for home financing. While most of these lenders are reputable businesses, the rates they offer may not be the lowest available. Some lenders may also advertise what appear to be attractive rates but which come with higher fees.
If a company contacts you with a home financing offer, be sure to get a second opinion from a lender you seek out. At The Money Store, we’re often able to beat the offers that people bring to us. And as the official mortgage provider of the IAFF, we provide qualified IAFF members and their immediate family with exclusive benefits, such as an application fee credit for a savings of up to $1,495 per loan.
Don’t Miss Out on Today’s Rates
If you’re thinking about buying or refinancing a home, now is a great time to explore your options. We can show you what rates you may qualify for, how much home you may be able to purchase, how much you may be able to save by refinancing a home, or how much home equity you may be able to convert into cash.
Rates can always rise again, and no one knows how long this opportunity will last, so don’t wait too long. Contact us today to schedule a free mortgage consultation with one of our IAFF specialists.
By refinancing a mortgage, total finance charges may be higher or lower over the life of the new loan. Contact your MLD Mortgage Inc. dba The Money Store mortgage loan originator to discuss the total expected costs and savings of your refinance.
* Rates and payments are examples provided for illustrative purposes only and are not advertised rates or commitments to lend. Available mortgage rates are subject to change and vary by loan program, borrower qualifications, and other factors.