Today's Mortgage Rates - 03/25/2025

Mortgage Rates Creep Higher

March's tumultuous financial markets seem to have settled somewhat in recent days, and mortgage rates edged higher.

As reported by Freddie Mac today, the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) rose by two basis points (0.02%) this week to perch at 6.67%. It was the second consecutive small increase, as the prior week rose by the same amount.

Average offered rates for 15-year fixed-rate mortgages firmed a bit as well, increasing by just three basis points (0.03%) to 5.83%. Like its longer-term sibling, this average has increased by four basis points over the last two weeks.

A 5/1 ARM might offer a homebuyer a lower-cost alternative to a long-term fixed-rate mortgage, and the difference in rate between 30-year FRMs and 5-year hybrid ARMs shrank slightly by just a little this week. The Mortgage Bankers Association said that the initial fixed interest rate on a hybrid 5-year ARM rose by three basis points (0.03%), moving up to 5.84%. This tightened the gap in rate compared to a 30-year FRM to eighty-one basis points (0.81%). More than a three-quarter percent differential in rate may be considerable enough to entice some early spring homebuyers to select an ARM as their choice of financing, as some savings can be had by doing so.

The Federal Reserve held their March meeting this week, making no change to policy rates but announcing a slowing in the program that is reducing the number of securities they hold. Markets reacted little to the change.

What did change is Fed members' forecasts for economic growth, unemployment and inflation. With tariff and trade uncertainty front and center, members median outlook for growth was pulled down for 2025 from an relatively solid 2.1% in December to a weaker 1.7% expectation. Expected federal government layoffs and knock-on effects was likely the cause of the increase in the expected unemployment rate to 4,4%, up a tenth of a percentage point. Forecasts for both headline and core inflation were ratcheted up, with overall PCE prices now expected to increase by 2.7% this year (up from 2.5%) and core PCE to 2.8%, also up from 2.5%.

Despite these forecasts, members still expect to be lowering the federal funds rate twice over the course of 2025, but this expectation seemed to have less conviction than just three months ago, as somewhat more votes looked for rates to be steady with perhaps just one trim at some point. Fed Chair Powell mentioned "uncertainty" in his press conference a number of times, and given this, "We do not need to be in a hurry to adjust our policy stance, and we are well positioned to wait for greater clarity."

Along with mixed inbound economic data this week, this message has seen influential bond yields edge lower, so mortgage rates will likely see this week's small increase erased in coming days (possibly last week's bump, too).

Each week in HSH's MarketTrends newsletter, we track and discuss economic conditions that affect mortgage rates and their impact on housing markets and consumers. Read the most recent edition of MarketTrends or subscribe for email delivery.