Today's Mortgage Rates - 02/21/2025

Mortgage Rates Slide Slightly

Mortgage rates were modestly lower this week.

As reported by Freddie Mac today the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) declined by two basis points (0.02%) this week, landing at 6.85%. This rate has declined for five straight weeks, falling by a cumulative 19 basis points over that time..

Average offered rates for 15-year fixed-rate mortgages moved downward slightly more, decreasing by five basis points (0.04%) to 6.04%. Like its longer-term counterpart, this average rate has actually moved in a narrow range for some weeks now but is down nearly a quarter percentage point from its 2025 peak.

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 expanded somewhat this week. The Mortgage Bankers Association said that the initial fixed interest rate on a hybrid 5-year ARM fell by twelve basis points (0.12%), settling back to 6.08%. The increase here enhanced the slight downward move by its long-term fixed-rate cousin and then some, widening the gap in rate back to seventy-seven basis points (0.77%). This may be considerable enough to entice some winter homebuyers to select an ARM as their choice of financing, as there may be some savings to be had by doing so.

Inflation concerns pressed the yields which most influence mortgage rates higher for much of last week, but a soggy report on January retail sales pulled them back down again. A Monday market holiday and fairly light calendar of new economic data allowed that decline to carry into this week, helping mortgage rates to ease slightly.

Investors also didn't find any surprises in the minutes from the January Fed meeting. No change to policy happened at that time, but the minutes revealed no specific concerns regarding the months-long firm trend for inflation, and the broad economy and labor markets were judged to be in good shape. At his post-meeting press conference, Fed Chair Powell noted "the broad sense of the Committee, actually, is that we don’t need to be in a hurry toadjust our policy stance," and this sanguine sentiment was quite evident in the text.

A contented Fed and economic data that balances increases and decreases in bond yields seems likely to help keep mortgage rates level to slightly lower again over the next few days.

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.