Today's Mortgage Rates - 04/25/2025

Rates Ease, A Little

Mortgage rates edged lower this week, with larger declines as fixed-rate periods shrank.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) stepped two basis points lower (0.02%), easing to 6.81%. A somewhat larger decline was expected, but the yields that influence long-term rates have whipsawed lately.

Average offered rates for 15-year fixed-rate mortgages dropped back by a bit more, posting a nine basis point (0.09%) slide over the last seven days to land at 5.94%. returning the most popular shorter-term mortgage to the middle of a four-week range.

At present, 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 widened a little this week again. The Mortgage Bankers Association said that the initial fixed interest rate on a hybrid 5-year ARM fell by ten basis points (0.10%) to 6.01%, expanding the gap in rate compared to a 30-year FRM expanded to eighty basis points (0.80%). On a $300,000 mortgage, a borrower using this ARM would see a $157 lower payment per month and would save more than $12,000 in interest cost over the first five years of the loan.

Although the path is by no means smooth, long-term yields have retreated somewhat from recent highs. At least for the moment, the White House has said some soothing things about the prospects for lower tariffs on China, which has helped stock markets to rally. Should lower levies be imposed, this would put less upward pressure on prices over time, and less threat of inflation helped bond yields to decline a bit.

Perhaps as important to bonds is that the President has "walked back" threats to fire Fed Chairman Jerome Powell. After issuing several threats over the last week that unsettled investors and caused a fresh rise in bond yields, the President said on Tuesday that "I have no intention of firing" the Fed Chair. This cheered wary investors, and the important yield on the 10-year Treasury retraced at least part of the early-week increase.

The economy is also cooling, or has cooled. The Fed's latest regional survey of economic conditions (aka "Beige Book") said of the 12 Fed Districts that "Just five saw slight growth, three noted activity was relatively unchanged, and the remaining four reported slight to modest declines." A cooler economy can help attenuate rising price pressures, and perhaps a combination of slower growth and less of an increase in inflation may allow the Fed to cut rates later this year. That said, a lot can (and likely will) happen between now and then. The next Fed meeting comes in less than two weeks' time.

Mortgage rates have essentially stabilized for the moment, perhaps with a slight downward bias. As such, odds favor (for now) slightly lower mortgage rates in the markets in the coming 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.