Mortgage Market Update — What’s Going On in August 2025?
The mortgage market is buzzing with headlines and opinions, but what does it mean for you as a potential homebuyer? From rising debt levels to pending Fed decisions, here’s a clear, Central Texas–focused update on what’s happening and how to navigate it.
1. Rates Are Steady (although some slight fluctuation)
The 30-year fixed mortgage averaged around 6.72% to 6.75% last week, with little movement heading into early August. The Fed held steady on its benchmark rate at 4.25%–4.50% and signaled rate cuts are possible later in 2025 if economic data weakens.
If you are ready to buy, it is smart to lock now and to not chase rates. Waiting may cost more, but if rates drop you can refinance when you think the time is right.
2. Home Prices Are Moderately Rising
According to the FHFA, home prices rose 4% over the past year, though recent monthly changes were flat or slightly down (~–0.2%). That means prices are stabilized, but appreciation is still accumulating.
If your timeline is flexible, waiting likely won’t see a significant price drop, but buying now would lock current value.
3. Mortgage Debt & Delinquencies Are Growing
Mortgage debt rose $131 billion in Q2 2025, outpacing other credit types. Delinquency rates ticked up slightly to 3% overall. FHA loans which are often used by first-time buyers saw the sharpest rise in delinquencies, especially in the South.
Even if you can qualify for a mortgage, there are additional costs that come with homeownership. Make sure you can afford the overall cost of homeownership, and not just the monthly payment. If you're using an FHA or low-credit option, planning ahead and staying engaged with your payment strategy is essential.
4. First-Time Buyers Are Leading the Market
First-time buyers accounted for 58% of agency-purchase mortgages in Q1 2025, with Gen Z making up roughly one-quarter of those buyers. FHA loans remain popular due to lower down payment requirements.
If you’re a first-time buyer, you are among the most active buying group right now. Lenders are focused on helping first-time buyers, so now just might be your moment.
5. Zillow Says Rates Must Drop to ~4.4% for Real Affordability
New data from a recent study shows that rates would need to fall to roughly 4.43% for housing to be truly affordable (~30% of income) at median prices. Median prices vary greatly based on location, so affordability is not just based on rates but also income, “local” pricing and loan structures.
Focus on finding the right loan and working within your income, and not solely on waiting for an ideal rate.
Yes, mortgage rates are higher than 2020 levels, but compared to history, they’re still moderate and the market fundamentals in Central Texas remain strong. Conditions favor prepared and informed buyers, especially first-timers.
Ready to see if buying now makes sense for you? Schedule your free 30-minute consultation, and let’s build your plan together. Schedule your time HERE.
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