Today's Mortgage Rates - 01/02/2025

No Mortgage-Rate Holiday Gift

Mortgage rates continued their year-end climb this week.

As reported by Freddie Mac today, the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) rose by thirteen basis points (0.13%) to 6.85% and has now risen by a quarter percentage point in the last two weeks.

Average offered rates for 15-year fixed-rate mortgages fared a little better but sported another eight basis point (0.08%) increase this week, lifting the most popular short-term mortgage to a flat 6.00%, a four-week high.

A 5/1 ARM might offer a homebuyer slightly lower-cost alternative to a long-term fixed-rate mortgage, and the difference in rate between 30-year FRMs and 5/1 ARMs expanded this week, at least a s far as we can reckon. The Mortgage Bankers Association didn't release updated rate information this week, but using the latest available data, the initial fixed interest rate on a hybrid 5/1 ARM still stands at 6.03% last week, but given the behavior of fixed-rate loans likely would have risen a bit more this week, too. The expected gap in rate compared to a long-term fixed-rate loan renders the choice of this ARM potentially compelling for homebuyers seeking a break on monthly payments.

Holidays tend to take folks out of homebuying or refinancing mode, so the recent rise in mortgage rates probably isn't garnering all that much attention or doing much damage to already-sluggish housing markets. However, not very long from now, eyes will again turn or return to buying homes and refinancing mortgages, and we'll need to see lower rates in the market to re-spur activity. Our new Two-Month Forecast for rates covers the period leading up to the early part of the spring homebuying season, at least for southern housing markets.

The underlying yields that most influence mortgage rates were firmer last week but have mostly stabilized over the last few days. A very thin calendar of economic data to consider and lots of investors on holiday means there is little to provide any fresh direction for interest rates and few folks to twist the market in one direction or the other. As such, odds favor that there will be little movement in mortgage rates over the coming few days, and we're likely on track for similar conditions next week, 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.