Heading into the Greater Boston fall real estate market, prospective home buyers received welcome news regarding mortgage loan interest rates.
The average rate on the 30-year, fixed-rate mortgage dropped 16 basis points to 6.29 percent on Friday, September 5, 2025, according to Mortgage News Daily, after a weaker-than-expected August employment report.
Friday's rate was the lowest rate since October 3, 2024, and the largest one-day decline since August 2024, breaking interest rates out of the high-6-percent range where they have lingered for months.
What triggered the decline? According to the Bureau of Labor Statistics, nonfarm payrolls increased by only 22,000 in August, while the unemployment rate rose to 4.3 percent. Economists surveyed expected payrolls to rise by 75,000. The employment report also showed a significant slowdown from the July increase of 79,000, which was revised up by 6,000. Revisions also showed a net loss of 13,000 in June.
"It's a well-known fact that the monthly jobs report is more capable of causing big reactions in rates than any other economic data," said Mortgage News Daily Chief Operating Officer Matt Graham. "In general, weaker jobs numbers prompt investors to buy bonds. When investors buy bonds, the price of those bonds goes up. When bond prices go up, rates go down."
The decline in rates marked a sharp turn from earlier in the year, when the Mortgage News Daily Rate Index had the 30-year note at 7.26 percent on Monday, January 13, 2025.
For homebuyers, the lower rates will result in a significant reduction in monthly housing costs. On a $675,000 mortgage loan, the difference in payment, excluding taxes and insurance (and excluding condo fees and mortgage insurance, if applicable), between a 7.26 percent and 6.29 percent interest rate is $435 per month or $5,220 per year.
Financially well-qualified Massachusetts homebuyers may be eligible for even lower rates.
The mistake many home buyers make is searching online and contacting national lenders unfamiliar with the Massachusetts home-buying process. Getting a referral to an experienced local loan officer who offers a variety of loan programs will help homebuyers identify a home loan that best suits their needs.
It's critical to find a patient loan officer who will take the time to explain the pros and cons of different loan programs. Obtaining a mortgage is not a one-size-fits-all proposition.
Mortgage applications to purchase a home declined 6 percent for the week ending August 29, 2025, but were 17 percent higher than the same week a year ago, the Mortgage Bankers Association reported on September 3, 2025. Lower interest rates are likely to spur an increase in mortgage applications in the coming weeks.
What prospective homebuyers should avoid doing is trying to time their home purchase to coincide with interest rates. It's not possible. If interest rates drop after a purchase, a homeowner can refinance their mortgage. If interest rates rise, you will be glad you bought when you did.
Home buyers should prioritize purchasing the right home. There's a saying in real estate: "Marry the house, date the rate." It makes a lot of sense.
