Average mortgage rates began the week slightly higher on Monday, March 17, 2025, a day before the Federal Reserve’s second rate-setting session of the year. Traders predict a 99% chance that the Fed will maintain the federal funds target interest rate at 4.25% to 4.50% on Wednesday, as per CME FedWatch. Mortgage rates are influenced by various factors such as inflation, employment rates, the bond market, and the overall economy, rather than directly by the Fed’s actions. With rates currently at their lowest levels in months, this could be an opportune time to seek a mortgage or obtain preapproval.
The current average rates for a 30-year fixed mortgage are 6.71% for purchase and 6.72% for refinance, showing a slight increase from the previous week. Rates on a 15-year mortgage average 5.99% for purchase and 6.00% for refinance. Similarly, the purchase rate for a 30-year fixed jumbo mortgage is 6.77%.
Mortgage rates are influenced by inflation rates, economic conditions, housing market trends, and the Federal Reserve’s target interest rate. Lenders also take into account factors such as your credit score, down payment amount, property value, and loan terms when determining rates. It’s advisable to lock in a mortgage rate when you are satisfied with the loan terms and market conditions.
Freddie Mac’s weekly report notes an average 6.65% for a 30-year fixed-rate mortgage, slightly up from the previous week. The 15-year fixed rate stands at 5.80%. These rates are lower compared to a year ago, reflecting a positive trend for homebuyers in the spring homebuying season.
For updated mortgage rate information, Freddie Mac releases its Prime Mortgage Market Survey data weekly on Thursdays at noon ET.
Factors that Influence Your Mortgage Rate
Even a small difference in your interest rate can lead to significant savings over the life of your mortgage. The rate offered to you depends on factors such as the specific mortgage you are interested in, the initial payments you are willing to make, and your overall financial well-being.
1. Credit Score: Your credit score is crucial in determining the mortgage rates available to you. Borrowers with good to excellent credit scores typically receive the best rates, while even those with fair credit may find decent offers. A FICO score of at least 670 is often preferred by lenders.
2. Down Payment: A higher down payment can result in a better interest rate. Putting down at least 20% of the home’s purchase price not only lowers the interest rate but also eliminates the need for mortgage insurance, reducing the overall cost.
3. Loan Term: Mortgage terms vary from 30 years to shorter options like 20, 15, or 10 years. Shorter terms usually come with lower interest rates but higher monthly payments, while longer terms may offer lower monthly payments at the expense of higher total interest paid.
4. Interest Rate Type: Mortgages can have fixed or variable interest rates. Fixed-rate mortgages maintain the same interest rate throughout the loan term, while adjustable-rate mortgages start with a fixed rate that later adjusts based on market conditions. Your choice between the two depends on your financial goals and risk tolerance.
5. Prequalification vs. Preapproval: Both processes help assess your affordability for a home. Prequalification provides an initial estimate based on basic information, while preapproval involves a more thorough review of your finances to offer a precise lending estimate.
Understanding how mortgage rates are affected by factors such as the Federal Reserve’s interest rate decisions can help you make informed decisions when navigating the homebuying process.
On September 18, the Federal Reserve initiated a target interest rate cut, with two more quarter-point reductions following in November and December. On January 29, 2025, the Fed decided to maintain the federal funds target interest rate at 4.25% to 4.50%, marking the first time the Fed has paused rate changes since its consecutive cuts in the previous months aimed at addressing inflation. The Fed emphasized its commitment to managing inflation in its post-meeting statement, noting stable unemployment rates and strong labor market conditions. The Fed plans to carefully evaluate incoming data and risks before making further adjustments, with three additional rate cuts projected for 2025. The upcoming policy meeting on March 18–19, 2025, is anticipated to maintain the current rate range, with market expectations aligning with this outcome. Economic indicators such as inflation and labor reports continue to influence speculation on future rate adjustments, while recent data shows a slight easing in inflation rates. Federal Reserve Chair Jerome Powell remains optimistic about the economy, emphasizing a cautious approach to policy decisions amid prevailing uncertainties.
The Federal Reserve is set to announce a rate decision led by Chair Powell at the conclusion of its meeting on Wednesday, March 19, 2025, at 2 p.m. ET. Find out more about upcoming Federal Reserve meetings and how they can impact your finances.
A recent antitrust settlement has changed the landscape for real estate transactions. Effective August 17, 2024, real estate agents must provide interested buyers with a representation agreement before touring a home, allowing for transparency in fees and payments. While this settlement is not expected to affect mortgage rates, it does provide consumers with the opportunity to negotiate agent fees, potentially saving money in the long term.
Explore more in our homebuying series, including tips on shopping for a mortgage, refinancing, understanding mortgage rate changes, and more. Discover the difference between mortgage lenders and loan servicers, how refinancing works, and eligibility for homebuyer assistance programs, even if you’ve owned a home before. Learn about adjustable-rate mortgages and how they differ from fixed-rate mortgages.
Financing your adjustable-rate mortgage and negotiating your mortgage rate may not be possible. Lenders take market conditions and financial factors into account when determining rates. However, you can inquire about reducing costs by exploring options like mortgage points, which are upfront fees that can lower your interest rate. These points typically cost 1% of your mortgage amount, potentially saving you money in the long run.
Regarding what happens to your mortgage after death, mortgages are typically not transferable, meaning the loan must be paid off in full for the property title to be transferred. Only those who signed the loan agreement are usually held liable for the mortgage debt.
If you already own a home and need funds for home improvements, debt consolidation, or emergencies, borrowing against your home’s equity can provide lower rates without refinancing. This option requires good credit and sufficient equity in your home.
Please note that the information provided is accurate as of March 17, 2025, and rates can vary by region. Sources used include Bankrate, Freddie Mac, U.S. Bureau of Labor and Statistics, and CME Group.
