Today's Mortgage Rates - 03/08/2025

Upset Markets, Lower Rates

In recent days, increasing worries about a slower economy ahead saw investors shift money out of stocks and into bonds, driving mortgage rates lower.

As reported by Freddie Mac today, the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) declined by thirteen basis points (0.13%) this week, landing at 6.63%. It is the lowest level for this rate since early December, and more than a third of a percentage point below its 2025 peak.

Average offered rates for 15-year fixed-rate mortgages moved downward by a little more, decreasing by fifteen basis points (0.15%) to land at 5.79%. That drop was good enough to return the average rate for the most popular short-term mortgage levels last seen in October 2024.

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 a little this week. The Mortgage Bankers Association said that the initial fixed interest rate on a hybrid 5-year ARM fell by twenty basis points (0.20%), dropping back to 5.85%. This widened the gap in rate compared to a 30-year FRM to seventy-eight basis points (0.78%). More than a three-quarters of a percentage point differential in rate may be considerable enough to entice some late winter homebuyers to select an ARM as their choice of financing, as there will be some savings to be had by doing so.

With tariff and trade-policy change front and center, investors have lately become more concerned that slowing growth is a greater concern than is inflation. Slower growth and higher input costs can sap the corporate profits that drive stock prices higher, and investors more pessimistic about the future may sell stocks and shift the proceeds into bonds, something they have seemed to do to a greater extent of late. As a result, yields decline, and carry mortgage rates downward along with them to at least some degree.

Higher input costs for foreign-sourced goods and services may or may not be fully passed along to consumers but are expected to have some impact on inflation, at least in the short term. Consumers weary of years of higher costs and high price levels may rein in their spending, at least for discretionary goods, potentially slowing the economy further. Whether this comes to pass is of course unknown, but worries that it may are fully in play at the moment.

Slower growth would tend to see the Fed looking to cut rates to spur demand; higher inflation tends to see the central bank hold pat at the very least. That's also a consideration for the future, but fear is driving the markets at the moment. Due out Friday, the February employment report may determine whether yields and rates continue to decline or level off, but it would seem that mortgage rates are in a flat to slightly-increasing stance at the moment.

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.