The Federal Reserve lowered interest rates in October 2025, and this has affected home loan costs across the country. Both people looking to buy a home and those who already own one are asking how much they might pay for their mortgage each month now.
Even though the Federal Reserve doesn’t directly set mortgage rates, its decisions have a big impact on how much it costs to borrow money for a house. Reports from CBS News show that the recent rate cut now means lower monthly payments for people with large mortgages.
Examples of Monthly Payments and Savings
Here’s an example:
- If you take out a $600,000 mortgage at the current average 30-year fixed rate of about 6.13%, your monthly payment for the loan’s principal and interest would be about $3,648.
- At the beginning of 2025, the average rate was higher—about 7.04%. With that rate, a $600,000 loan would have cost you around $4,008 per month.
- That’s a difference of roughly $360 less each month, or over $4,300 in savings over a year at today’s rate compared to earlier this year.
For a bigger loan, say $800,000, you also see significant savings. In October 2024, the average rate was 6.72%, so the monthly payment was about $5,173. Now, with the lower rate, payments on the same loan amount are about $263 less every month.
These examples show a bigger trend: Mortgage payments are still higher than they were a few years ago when interest rates were very low, but the Federal Reserve’s recent rate drop is giving many buyers and owners some financial relief.
Other Important Things to Keep in Mind
- The monthly payment figures above cover only the loan’s principal and interest. You still need to pay other costs like property taxes, homeowners’ insurance, and possibly private mortgage insurance or other fees.
- While the Fed’s rate cut helps, mortgage rates depend on many things—including the broader economy, the lender’s policies, and trends in home prices. Rates could rise or fall in the future.
- If you currently have a mortgage with an interest rate above 7%, now may be a good opportunity to refinance and save money. But remember that refinancing comes with its own costs, like closing fees and possibly starting the loan’s term over again.
- If you are thinking about buying a home, these numbers show how both the current rate environment and the size of your loan can change your monthly payments.
Even a small drop in rates can make a big difference in payments each month, which also impacts your budget and long-term financial plans.
In Summary
Thanks to the Federal Reserve’s October 2025 rate cut, mortgage rates are lower than they were earlier in the year. If you are borrowing $600,000, you might save hundreds of dollars each month compared to rates from early 2025. The savings for larger loans are also big.
Just remember: The figures above include only the main loan costs. Full homeownership costs will be higher once you add in taxes, insurance, and other fees. Still, the rate cut makes homes more affordable for many people.
If you are thinking about buying or refinancing a home, this may be a good time, but make sure you consider all costs, how long you want the loan, and how long you plan to stay in the home.
-
Check out: Planning to Buy a House in Early 2026? Here’s What You Need to Know
