As of Tuesday, March 11, 2025, average mortgage rates have remained relatively stable despite concerns about a looming recession and recent turmoil in the stock market. Economists are closely monitoring the consumer price index report due tomorrow, as it will offer valuable insights into the economy and potentially influence the Federal Reserve’s decision to maintain the federal funds rate between 4.25% and 4.50% at its upcoming meeting.
While mortgage rates are not directly tied to the Fed rate, they are influenced by similar economic factors such as inflation and employment trends that the Fed considers when setting policies. The recent slight decrease in mortgage rates coincides with the beginning of the busy spring homebuying season. If you are considering purchasing a home this year, now might be a good time to start exploring mortgage options, comparing offers, and obtaining preapproval to stand out in the competitive market.
Currently, the average rate for a 30-year fixed mortgage is 6.72% for purchases and 6.69% for refinancing, showing a marginal decrease from the previous week. Rates for a 15-year mortgage are averaging at 6.00% for purchases and 5.99% for refinancing, also experiencing a minor decline from the previous week. The average rate for a 30-year fixed jumbo mortgage stands at 6.78%.
Mortgage rates are influenced by various factors including inflation rates, economic conditions, housing market trends, and the Federal Reserve’s target interest rate. Lenders also consider individual factors such as credit score, down payment amount, property details, and loan terms when determining mortgage rates.
Since mortgage rates can change frequently, it is advisable to secure a rate when you are comfortable with the terms of your mortgage or home loan. The recent data from Freddie Mac shows a decline in average rates, providing potential homebuyers with increased purchasing power and motivation to take advantage of the current market conditions.
The decline in rates is providing some current homeowners with the opportunity to refinance. In fact, the share of mortgage applications for refinancing reached nearly 44% this week, the highest since mid-December. Freddie Mac updates its Prime Mortgage Market Survey data weekly on Thursdays at noon ET.
Here are the top four factors that can affect your mortgage rate:
1. Your credit score: Knowing your credit score can help you find lenders likely to approve you and understand which mortgage options suit your lifestyle and income. Borrowers with good to excellent credit typically receive the best rates.
2. Your down payment: Putting more money down upfront can lead to a better interest rate. Paying at least 20% of the home’s purchase price can result in a lower rate and help you avoid mortgage insurance.
3. Your loan term: You can choose from various loan terms, such as 30 years, 20 years, 15 years, or 10 years. Shorter terms usually offer lower rates but higher monthly payments, while longer terms can lead to lower monthly payments but higher total interest costs.
4. Interest rate type: Mortgage rates can be fixed or variable. Fixed rates remain constant throughout the loan term, while adjustable rates start with a fixed period and then adjust based on market conditions.
Understanding prequalification vs. preapproval:
– Prequalification provides a rough estimate of how much you can borrow based on basic information.
– Preapproval involves a deeper financial review by a lender to give you a more accurate loan estimate.
Mortgage rates are influenced by various factors, including the benchmark federal funds target interest rate set by the Federal Reserve. While mortgage rates do not directly follow the Fed rate, they are impacted by similar economic indicators considered by the Federal Reserve, such as inflation.
As the Federal Reserve raises interest rates, mortgage rates typically follow suit. Following eleven rate hikes between March 2022 and July 2023 to combat high inflation resulting from the pandemic, the Federal Reserve made a significant half-point cut to its federal funds target interest rate on September 18. This was followed by two quarter-point cuts after the November and December policy meetings. On January 29, 2025, the Fed decided to maintain the federal funds target interest rate at 4.25% to 4.50%, citing ongoing efforts to control inflation and noting stable labor market conditions.
Looking ahead to the next policy meeting on March 18–19, 2025, it is widely anticipated that the Federal Reserve will keep the Fed rate unchanged at 4.25% to 4.50%. Market expectations suggest a high likelihood of this outcome. Economists are closely monitoring inflation and labor reports for insights into potential future adjustments to the Fed rate. Recent data indicates a shift in inflation trends, with rates fluctuating between 2.5% and 4% since May 2023.
In the midst of economic uncertainties, the upcoming inflation readings will be crucial in assessing the economy’s health. Recent consumer price index data revealed a monthly price increase of 0.5%, primarily driven by higher costs for food, fuel, and shelter. Similarly, the producer price index reported a 0.4% increase in prices for goods and services. The persistence of inflationary pressures is expected to play a key role in shaping future monetary policy decisions.
Federal Reserve Chair Jerome Powell announced that the Fed will pause cutting rates until later in the year, stating that despite uncertainty, the US economy remains strong. Powell emphasized the importance of waiting for more clarity on the Trump administration’s policy changes rather than rushing into further rate cuts. The rate-setting panel led by Powell is set to announce a rate decision on March 19, 2025.
In other news, a $418 million antitrust settlement with the National Association of Realtors was granted preliminary approval by a judge on April 23, 2024. This settlement ends customary real estate broker commissions of up to 6% of a home’s purchase price. Effective August 17, 2024, real estate agents are required to provide buyers with a representation agreement before touring a home to introduce transparency into the agent-buyer relationship and fees.
This settlement is not expected to impact mortgage rates but allows consumers to negotiate agent fees, potentially saving them money in the long run. For more information on mortgages, refinancing, and homebuying assistance programs, check out our comprehensive guides to help you make informed decisions for your financial goals and budget.
An adjustable-rate mortgage (ARM) is a type of home loan with a variable interest rate. Unlike a fixed-rate mortgage that locks in an interest rate for the entire loan term, an ARM begins with a fixed rate for a set period, typically three years or more, before adjusting to a higher rate and periodically readjusting for the rest of the loan’s term.
For example, a 5/1 ARM means the rate is fixed for the first five years and then adjusts annually. While it’s not common to negotiate mortgage rates, you can inquire about reducing costs through options like mortgage points, which can lower your interest rate in exchange for upfront fees paid to the lender.
In terms of what happens to your mortgage after you pass away, mortgage debt is handled differently than other debts in your estate. Typically, mortgages are not transferable, so the property must be paid off in full to transfer the title. Only those who are on the loan are responsible for the mortgage debt.
If you already own a home, you can tap into your home’s equity to cover large or unexpected expenses, such as home renovations or emergencies. This can be a cost-effective way to access funds with lower rates without refinancing your existing mortgage, provided you have good credit and sufficient equity in your home.
Note that rates mentioned are accurate as of Tuesday, March 11, 2025, and may vary by region or change over time. Sources for this information include Bankrate, Freddie Mac, U.S. Bureau of Labor Statistics, and CME Group.
