Unlock Exclusive Insider Information on Mortgage Rates
As of Friday, February 7, 2025, average mortgage rates have dipped, with the 30-year fixed benchmark now below 7%. The anticipated employment report scheduled to be released today is projected to reveal steady but modest increases in job growth for January, alongside an unchanged 4.1% unemployment rate. These figures, coupled with upcoming inflation data next week, will play a significant role in the Federal Reserve’s decision on benchmark interest rates in the coming month. Current speculation suggests an 85.5% likelihood that the Fed will maintain rates between 4.25% to 4.50%, according to CME FedWatch.
Economic strength, particularly factors like job growth, influences rates on significant loans such as mortgages. Rates typically rise when market conditions, like robust job growth, instill confidence in lenders regarding borrower demand. Presently, the average rate for a 30-year fixed mortgage sits at 6.91% for purchase and 6.88% for refinance, reflecting a decrease of 5 basis points from last week’s 6.96% for purchase and 6 basis points from 6.94% for refinance. Meanwhile, rates for a 15-year mortgage average at 6.18% for purchase and 6.14% for refinance, marking respective drops of 6 and 11 basis points from the previous week. Jumbo mortgages with a 30-year fixed term carry an average rate of 7.01%.
For a comprehensive guide on securing the lowest mortgage rates, check out our must-read article: “6 ways to get the lowest rate on your next mortgage right now.”
Purchase Rates for Friday, February 7, 2025:
– 30-year fixed rate: 6.91%
– 20-year fixed rate: 6.59%
– 15-year fixed rate: 6.18%
– 10-year fixed rate: 5.97%
– 5/1 adjustable rate mortgage: 6.32%
– 10/1 adjustable rate mortgage: 6.78%
– 30-year fixed FHA rate: 6.81%
– 30-year fixed VA rate: 6.72%
– 30-year fixed jumbo rate: 7.01%
Refinance Rates for Friday, February 7, 2025:
– 30-year fixed rate: 6.88%
– 20-year fixed rate: 6.58%
– 15-year fixed rate: 6.14%
– 10-year fixed rate: 6.01%
– 5/1 adjustable rate mortgage: 6.34%
– 10/1 adjustable rate mortgage: 6.81%
– 30-year fixed FHA rate: 6.83%
– 30-year fixed VA rate: 6.46%
– 30-year fixed jumbo rate: 6.96%
Purchase application volumes are slightly higher compared to a year ago, suggesting a hidden demand in the market. Freddie Mac updates its Prime Mortgage Market Survey data weekly on Thursdays at noon ET.
There are four main factors that influence your mortgage rate. Even a small difference in your interest rate can result in significant savings over the life of your loan. However, the rate you are offered depends on the type of mortgage, upfront payments, and your financial situation.
1. Your credit score: Knowing your credit score can help you find lenders for approval and understand the best mortgage for your needs. Borrowers with good to excellent credit scores usually get the best rates.
2. Your down payment: Putting more money down upfront can lead to a lower interest rate and help you avoid mortgage insurance.
3. Your loan term: Shorter terms often come with lower rates but higher monthly payments. Longer terms may have lower monthly payments but higher total interest costs.
4. Interest rate type: Fixed-rate mortgages offer a consistent rate, while adjustable-rate mortgages start with a lower fixed rate and adjust later based on market conditions.
Understanding the difference between prequalification and preapproval is important when determining how much house you can afford. Prequalification is a basic estimate, while preapproval involves a more thorough review of your finances.
Changes in mortgage rates are influenced by various factors, including the Federal Reserve’s interest rate decisions. As the Fed rate increases, mortgage rates generally rise as well.
Between March 2022 and July 2023, the Federal Reserve took action 11 times to address high inflation following the pandemic. On September 18, a highly anticipated half-point cut to the federal funds target interest rate was announced, followed by two quarter-point cuts after the November and December policy meetings.
In a subsequent meeting on January 29, 2025, the Fed opted to keep the benchmark rates unchanged at 4.25% to 4.50%. The decision was made in light of efforts to control inflation, with the Federal Reserve noting stable unemployment rates and solid labor market conditions. The Fed indicated a cautious approach to additional adjustments, considering incoming data, the evolving outlook, and risks.
Although only two more cuts were expected in 2025, uncertainty loomed due to the impact of a Trump presidency. Market expectations for the upcoming March 18–19, 2025 policy meeting suggest an 85.5% chance of no change to the interest rates. Economists are closely monitoring inflation and labor reports for insights into potential future rate adjustments.
Recent economic indicators, such as a robust jobs report in December and fluctuating inflation rates, have influenced the Fed’s stance. Federal Reserve Chair Jerome Powell emphasized the need for substantial progress on inflation or signs of labor market weakness before considering further adjustments. The rate-setting panel, led by Powell, will announce its decision on March 19, 2025, following in-depth analysis of economic conditions.
When is the upcoming Federal Reserve meeting? What can you anticipate — and how does it impact your finances?
Updates on NAR settlement and realtor commission adjustments:
Recently, on April 23, a judge preliminarily approved a $418 million antitrust settlement with the National Association of Realtors, putting an end to the usual real estate broker commissions, which could reach up to 6% of a home’s selling price. Starting on August 17, real estate agents are mandated to present a representation agreement to potential buyers before showing them a property. This agreement aims to enhance transparency in the buyer-agent relationship, outlining the agent’s fees and payment methods. While this settlement is not projected to influence mortgage rates, it does open opportunities for consumers to negotiate agent service fees, potentially leading to cost savings in the long term.
Common inquiries about mortgage rates:
Explore essential questions regarding mortgages to help you make informed decisions aligned with your budget and financial objectives. Additionally, delve into our diverse range of personal finance resources to aid you in saving, earning, and growing your wealth.
Clarifications on mortgage-related terms:
– What are mortgage lenders?
Lenders are financial institutions that extend loans to homebuyers. Distinguishable from loan servicers, lenders typically manage the administrative aspects of your loan, including processing payments, communicating with borrowers, and issuing monthly statements.
– What does refinancing a mortgage entail?
Refinancing involves swapping your current mortgage for a new one with better terms and lower rates. With refinancing, the new lender covers the existing mortgage, and you begin repaying the new loan. Refer to our refinancing timing guide for a detailed explanation of the process.
– What is a mortgage rate lock?
A mortgage rate lock is an assurance from your lender that your interest rate will remain unchanged for a specified duration, often around 30 to 60 days or more. This safeguard enables you to secure current rates against market fluctuations during home purchases or refinancing. Learn more about mortgage rate locks in our comprehensive guide.
– Can I qualify for homebuyer assistance if I’ve previously owned a home?
Absolutely. While numerous homebuyer assistance programs cater to first-time buyers, the IRS and HUD consider you a first-time homebuyer if neither you nor your spouse has owned a primary residence in the past three years. Discover potential programs accessible to you, even if you have prior homeownership experience, in our homebuyer assistance guide.
– What is an adjustable-rate mortgage (ARM)?
An adjustable-rate mortgage, commonly referred to as an ARM, features a variable interest rate. Unlike fixed-rate mortgages with a locked interest rate and consistent payments for the entire loan duration, ARMs commence with a fixed rate for a set period, typically three years or more, before transitioning to a variable rate that adjusts periodically throughout the loan term. Learn about transitioning from an ARM to a fixed-rate mortgage in our refinancing guide.
Interested in negotiating your mortgage terms?
Is it possible to negotiate the interest rate on a mortgage? It’s not very likely, as lenders take market conditions and various financial factors into account when setting rates. However, you can inquire about ways to decrease costs when comparing different mortgage lenders. For example, some lenders may offer lower rates if you are willing to pay “mortgage points” upfront, which are fees paid to the lender. A mortgage point could equal 1% of your total mortgage amount, which would be around $5,000 for a $500,000 home loan. Each point paid could potentially reduce your interest rate by approximately 0.25%, depending on the lender and specific loan terms. To learn more about securing the best rate for your next mortgage, refer to our comprehensive guide.
What happens to your mortgage in the event of your death? Unlike other debts that are typically settled through your estate before assets are distributed to heirs, a home mortgage is handled differently. In most cases, mortgages are not transferable, meaning the property title must be fully paid off in order to transfer ownership. Only individuals who are listed on the loan are held responsible for the mortgage debt. Discover more insights into the fate of your mortgage after you pass away.
If you already own a home, is it possible to borrow against the equity to cover large expenses or unexpected costs? Yes, you can utilize your home’s equity to access funds for purposes such as home renovations, paying off high-interest credit card debt, or addressing emergencies. This strategy allows you to benefit from lower rates without having to refinance, while maintaining your existing low-rate mortgage. Typically, you need a good to excellent credit score and have accumulated sufficient equity in your home to qualify. Find out how you can leverage your home equity as interest rates decrease.
Please note: The rates mentioned were accurate as of Friday, February 7, 2025, at 6:15 a.m. ET. Annual percentage yields (APYs) and promotional rates may vary by region and are subject to change.
Sources:
– Mortgage Industry Insights, Bankrate. Retrieved on February 7, 2025.
– Economic, Housing and Mortgage Market Outlook – January 2025, Freddie Mac. Retrieved on January 30, 2025.
– Primary Mortgage Market Survey, Freddie Mac. Retrieved on January 31, 2025.
– Employment Situation Summary, U.S. Bureau of Labor and Statistics. Retrieved on January 13, 2025.
– Consumer Price Index Summary, U.S. Bureau of Labor and Statistics. Retrieved on January 16, 2025.
– Producer Price Index News Release summary, U.S. Bureau of Labor and Statistics. Retrieved on January 15, 2025.
– CME FedWatch Tool, CME Group. Retrieved on February 7, 2025.
