Mortgage Watch

Mortgage Rates: A Slight Dip

Mortgage Rates are still trending slightly lower this week with average 30-year fixed mortgage rate has decreased to 6.375%, down from 6.50% the previous week. (Note: this is for top-tier borrowers of conforming purchase loans, with 20% down, and 780 FICO scores) This marks the lowest point since April, offering a modest reprieve for prospective homebuyers.

The Role of Mortgage-Backed Securities (MBS)

Mortgage rates are closely tied to the performance of Mortgage-Backed Securities (MBS). When MBS prices rise, yields fall, leading to lower mortgage rates. This week, MBS prices have seen slight increases, contributing to the dip in mortgage rates.

Federal Reserve Policies and Economic Indicators

The Federal Reserve's stance on interest rates significantly impacts mortgage rates. Fed Governor Christopher Waller has indicated support for initiating interest rate cuts starting in September, citing signs of a weakening labor market. Such policy shifts can lead to lower mortgage rates as borrowing costs decrease.

Supply and Demand Dynamics

Mortgage applications have decreased by 0.5% in the week ending August 22, 2025, indicating a slight dip in demand. This reduction in demand can exert downward pressure on mortgage rates as lenders adjust to attract borrowers.

Bottom Line: While the recent dip in mortgage rates is encouraging, the market remains sensitive to economic indicators and Federal Reserve policies. Prospective home buyers should stay informed about these factors, as they can influence borrowing costs in the coming weeks.

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SOURCE & AUTHOR | Keith Murphy Branch Manager – Essex Mortgage NMLS #330827 Direct: 714-309-1140 Apply: www.GoTeamMurphy.com

About the Author

Tim Morissette, REALTOR®

Tim Morissette, also known in the community as Mr. Foothill Ranch, offers over 48 years of real estate experience which has given him an established reputation and unmatched market knowledge. He is joined by his wife, Michele and sons Matt and Jeff, as they continue to offer personal service with an emphasis on achieving his clients’ real estate goals. This unique combination of traits has led to his proven track record of referral and repeat business. This can be witnessed by the trust of homeowners in Foothill Ranch where he has sold twice as many homes and represented three times more buyers than the next-leading real estate agent for the last 29 years.

As residents of Foothill Ranch since 1994, Tim and Michele are actively involved in the community by fundraising for Foothill Ranch Library, Make-a-Wish Foundation, Cancer Society, Homes for Habitat, Relay for Life, South County Outreach, and the local church and schools. Tim enjoys sponsoring community-wide garage sales, paper shredding and e-waste recycling event, an Easter egg hunt, & a Meet Santa Event.

Tim and Michele are dedicated to their family of four sons, daughter-in-laws, and grandchildren. As a family, they enjoy many outdoor activities which include camping, spearfishing, mountain climbing and exploring the miles of hiking and equestrian trails in Foothill Ranch and the Whiting Ranch Wilderness Park. Tim and his sons are also avid snowboarders and enjoy mountain biking and lobster diving. Family is a top priority in the Morissette household. They look forward to helping more families achieve their dreams of homeownership.