Today's Mortgage Rates - 02/15/2025

Stability Masks Volatility

Mortgage rates were mixed this week.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) declined by two basis points (0.02%) this week, easing to 6.87%. This rate has trended gently downward for the last four weeks.

Average offered rates for 15-year fixed-rate mortgages moved in the other direction, increasing by four basis points (0.04%) to 6.09%. Like its longer-term counterpart, this average rate has actually moved in a narrow range for some weeks now.

A 5/1 ARM might offer a homebuyer a lower-cost alternative to a long-term fixed-rate mortgage, but the difference in rate between 30-year FRMs and 5-year hybrid ARMs shrank somewhat this week. The Mortgage Bankers Association said that the initial fixed interest rate on a hybrid 5-year ARM rose by thirteen basis points (0.13%), moving back up to 6.20%. The increase here overcame the slight downward move by its long-term fixed-rate cousin and then some, narrowing the gap in rate back to sixty-seven basis points (0.62%). This may still 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.

Mortgage rates and bond yields had been pretty level until the latest update on inflation came on Wednesday. The Consumer Price Index for January came in rather hotter than was expected, posting a 0.5% increase overall. This lifted the annual rate of price increases to a flat 3%, the highest it has been since last June. So-called "core" inflation also firmed, increasing by 0.4%, the largest monthly rise since last March, returning the annual rate of core inflation to 3.3%, up a tenth of a percentage point and back to a level where it has been in four of the last six months. No progress on inflation and signs of rising prices sparked a selloff in the bond market, lifting yields and mortgage rates.

Thursday's update on Producer Prices was little better, coming in above expectations with a 0.4% increase overall. Overall PPI remained level at a 3.5% annual clip, while core goods prices rose by only 0.1% from a month ago and a flat 2% over the last year. Service prices as measured here also mellowed just slightly. However, that there was somewhat less core inflation in the PPI report cheered investors, and that was good enough to erase some of the spike in yields and rates.

The net result is that while rates didn't move much over the last week, they are poised to move a bit higher in the coming days, likely ending the weeks-long decline in the 30-year FRM.

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.