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2w ago

Mortgage Rates Drop to Multi-Month Lows, Fueling US Refinance Spike and UK Sub-5% Fixes

Steady inflation readings combined with softer labor data have shifted central bank outlooks, driving declines in mortgage borrowing costs on both sides of the Atlantic.

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In an aerial view, homes are seen under construction at a new housing development on August 08, 2025, in Henderson, Nevada.
One of the prime factors keeping the U.S. housing market frozen is mortgage rates.
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Overview

  • U.S. 30-year fixed mortgage rates fell about 10 basis points to roughly 6.67%, the lowest level since April, boosting market expectations of Federal Reserve rate cuts.
  • Refinance applications surged around 23% in the week ended Aug. 8, marking the strongest week for refinancing since April; adjustable-rate mortgage applications jumped about 25% to their highest share since 2022.
  • Purchase mortgage applications rose only about 1%, as high home prices and a large cohort of borrowers locked into pandemic-era sub-4% loans limited new homebuying demand.
  • In the U.K., the Bank of England’s base rate cut from 4.25% to 4% coincided with average two-year fixed mortgage rates dipping to 4.99%, the first sub-5% reading since before the 2022 mini-Budget.
  • Despite lower rates, elevated prices, tight inventory and a wave of expiring fixed deals are keeping a broad recovery in home sales out of reach unless borrowing costs decline further.