2025 Mortgage Rates Update: 30-Year Loans Drop to 7.35%, Lowest Since February

Mortgage Rate Trends - March 5, 2024

Mortgage rates on 30-year fixed loans have fallen to their most affordable point since mid-February, now averaging 7.35%. While rates for other new purchase mortgage types showed mixed results, refinancing rates mostly experienced an increase.

Because mortgage rates vary significantly among lenders, it's crucial to compare offers regularly to secure the best deal for your home loan, regardless of the loan type.

Current Mortgage Rate Averages for New Purchases

After peaking at 7.48% recently, the 30-year fixed mortgage rate has eased by three basis points to 7.35%, marking the lowest level since February 15. Although still above the sub-6% rates seen earlier in February, this is a substantial improvement from October’s historic 23-year high of 8.45%.

Fifteen-year fixed loans remained mostly steady, inching up slightly to 6.77%. This is higher than the seven-month low of 6.10% recorded before the new year but still below October’s 7.59% peak—the highest since 2000.

Jumbo 30-year mortgage rates, after rising to a three-month high of 6.95% last week, have slightly retreated to 6.82%. October’s 7.52% level was the highest jumbo rate in over two decades.

Other new purchase loan rates mostly held steady, with notable decreases in VA 30-year loans (down 23 basis points) and 20-year loans (down 8 basis points). Conversely, 7/6 adjustable-rate mortgages saw a modest increase of 6 basis points.

Weekly Freddie Mac Mortgage Rate Averages

Freddie Mac’s weekly report showed a 4 basis point rise in the 30-year fixed rate, reaching 6.94%. This is down significantly from the 7.79% peak in late October 2023, the highest in 23 years. Freddie Mac’s averages differ from daily averages as they incorporate rates over five days and may include loans with discount points, unlike zero-point loan averages from other sources.

Refinancing Rate Movements

Refinancing rates mostly increased on Monday, with the 30-year refi average climbing 15 basis points, widening the spread between purchase and refinance rates to 49 basis points. Fifteen-year and jumbo 30-year refi rates remained flat, while 20-year refi rates decreased by 19 basis points. FHA and VA 30-year refinance loans increased by 8 and 9 basis points, respectively.

Use our Mortgage Calculator to estimate monthly payments for various loan scenarios.

Important Considerations

Displayed rates reflect averages and generally differ from advertised teaser rates, which often require upfront points or are based on borrowers with exceptional credit profiles. Your actual mortgage rate will depend on factors like credit score, income, and loan amount.

Lowest Mortgage Rates by State

Mortgage rates vary by state due to differences in credit profiles, loan types, and lender risk strategies. Mississippi, Vermont, Hawaii, Iowa, and Louisiana offer the most affordable 30-year new purchase rates, while Alabama, Minnesota, Oregon, Arizona, Georgia, and Nevada have the highest.

What Influences Mortgage Rate Fluctuations?

Mortgage rates are influenced by several factors, including:

• Movements in the bond market, especially 10-year Treasury yields
• The Federal Reserve's monetary policies, including bond purchasing and government mortgage funding
• Competition among lenders and loan types

Since these factors interact complexly, pinpointing a single cause for rate changes is challenging.

In 2021, rates remained relatively low due to the Fed’s bond-buying programs responding to the pandemic. Starting November 2021, the Fed tapered these purchases, ending in March 2022. Subsequently, aggressive rate hikes raised the federal funds rate by 5.25 percentage points over 16 months, indirectly pushing mortgage rates higher.

The Fed has paused rate hikes since January 31, 2024, signaling a potential end to increases but maintaining caution due to persistent inflation. Rate cuts are anticipated later in 2024, though timing remains uncertain.

How We Calculate Mortgage Rates

Our national averages are based on quotes from over 200 leading lenders, assuming an 80% loan-to-value ratio and a FICO score between 700 and 760. These reflect realistic expectations rather than promotional teaser rates. State-level lowest rates are similarly calculated based on local lender offerings under these parameters.

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