Today's Mortgage Rates - 02/05/2025

Rates Close January on Flat Note

Mortgage rates barely budged this week.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) declined by one basis point (0.01%) this week, easing to 6.95%. For the month, this rate averaged 6.96% so there hasn't been a whole lot of movement in rates to be seen overall.

Average offered rates for 15-year fixed-rate mortgages managed a slightly larger decrease, falling by four basis points (0.04%) to 6.12%. As with its longer-term sibling, the decline here hasn't been all that much to behold, but this average is almost exactly back to where it started the month.

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 5/1 ARMs narrowed again this week. The Mortgage Bankers Association said that the initial fixed interest rate on a hybrid 5/1 ARM rose by three basis points (0.03%) to 6.44%. Coupled with the slight downward move by its long-term fixed-rate cousin, this closed the gap in rate to just 51 basis points (0.51%). This slightly-better-than-a-half-percentage-point gulf might no longer be considerable enough to entice some winter homebuyers to select an ARM as their choice of financing, even though there may be some savings.

The Fed held a policy meeting this week and made no change to short-term interest rates. While holding rates steady, the Fed still considers their present level to be "meaningfully restrictive," or at a level still high enough to damp economic growth and inflation over time. Wile we'll have to wait to see what happens with price pressures -- at last glance, they had stopped abating -- but economic growth did settle back in the fourth quarter, as the initial estimate of GDP for the period came in a 2.25%, a notable downshift from the 3.07% pace seen in the third quarter. An update to PCE prices -- the Fed's preferred inflation gauge -- comes out tomorrow.

Bonds benefited from a rough day in the equity market earlier this week, and the yield on the influential 10-year Treasury dropped by about 10 basis points or so. While that won't likely all translate into retail mortgage rates, it does suggest that slightly lower mortgage rates should be seen in the market at the moment, and 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.