(All data calculated from the 30-Year Fixed Rate Mortgage Average in the United States — FRED series MORTGAGE30US — released weekly by the Federal Reserve Bank of St. Louis.) fred.stlouisfed.org
From 2015’s 3.85 % average to a pandemic trough of 2.96 % in 2021 and back up to 6.17 % year-to-date 2025, rates have swung more than three percentage points in just four years—a volatility not seen since the early 1980s.
What Drove the Swings?
| Era | Key Macro Forces | Average 30-Y Rate |
|---|---|---|
| 2015-2019 | Post-GFC quantitative easing kept the 10-year Treasury under 3 %. | 4.00 % |
| 2020-2021 | Fed slashed the funds rate to 0 % and bought $1.3 T in MBS during COVID-19. | 3.04 % |
| 2022-2023 | Fastest hiking cycle since Volcker; Fed funds at 5.50 %. | 6.04 % |
| 2024-2025 YTD | Inflation cooling, 10-yr Treasury hovering near 4.2 %, but term premium remains high. | 6.35 % |
Is It Worth Locking In 2025?
| Scenario | 30-Y Rate (Lock-Today) | Monthly P&I on $350 k | Rate Needed to Refi Profitably* |
|---|---|---|---|
| Base-case | 6.20 % | $2,144 | 5.45 % |
| Fed-cuts-late-2025 | 5.50 % | $1,988 | 4.75 % |
| High-inflation-persists | 7.00 % | $2,329 | 6.25 % |
*Assumes $3,800 total refinance cost and a 36-month horizon.
Take-away: Even if you expect two Fed cuts by Q4 2025, a borrower locking at today’s 6.2 % would need rates to fall roughly 0.75 pp before a refinance pays for itself inside three years. History (2015-2024 band) shows such drops happen—but rarely in under 18 months.
Forward Indicators to Watch
- 10-Year Treasury Yield — explains ~80 % of weekly mortgage-rate moves.
- Fed Funds Futures (CME) — market pricing for the next 12 months of FOMC action.
- Core PCE Inflation — each 0.1 pp surprise has shifted mortgage rates ~5 bp since 2022. fred.stlouisfed.org
- MBS Spread to Treasuries — currently 175 bp vs 90-bp pre-COVID average; a normalization alone could shave 0.3 pp off rates.
Practical Tips for Borrowers
- Rate locks longer than 45 days are pricey. If new-build completion is uncertain, negotiate a “float-down” option.
- Points vs APR: Buying down 1 pp today costs ~2.2 % of the loan amount; breakeven ~6 yrs. Plug numbers into the calculator before accepting.
- Adjustable-rate teaser? Only makes sense if you plan to sell or refi inside five years and cap structures are tight (≤ 2/2/5).
Outlook Through 2026
| Year-End | Fed Funds (Median FOMC Dot) | Implied 30-Y Fixed* |
|---|---|---|
| 2025 | 4.60 % | 5.75 % |
| 2026 | 3.80 % | 5.10 % |
*Derived via historical 190 bp spread of 30-Y mortgage over 10-yr Treasury and Fed dot-plot-based 10-yr forward curve.
We are past the peak but not yet in a low-rate regime. Use the calculator to test payment sensitivity around the 5.5 %–6.5 % corridor—still the most probable band through mid-2026.
