2025 Mortgage Rates Drop: 30-Year Fixed at 7.21% - Best Prices Since February

Mortgage Rate Update - March 7, 2024

The 30-year fixed mortgage rate has declined for the third consecutive day, reaching an average of 7.21%, the lowest since early February. This downward trend extends across nearly all new purchase and refinancing loan types, signaling relief for homebuyers and homeowners looking to refinance.

Mortgage rates can vary significantly between lenders, so it’s essential to compare offers regularly to secure the best deal tailored to your financial profile.

Current Mortgage Rate Averages for New Home Purchases

Following a spike to 7.48% two weeks ago—the highest in nearly three months—the 30-year fixed new purchase rate has steadily decreased. Wednesday’s 10 basis point drop, following two days of 7 basis point declines, brought the average down to 7.21%, marking its lowest point since February 12.

Although rates dipped below 6% in early February, the current average remains somewhat elevated. However, it’s substantially lower than last October’s historic 23-year peak of 8.45%.

For comparison, 15-year new purchase loans have also seen a decrease, falling 7 basis points to 6.61%, their lowest since February 12 but still higher than the seven-month low of 6.10% recorded just before the new year. Jumbo 30-year loans dropped to 6.70%, a 3-week low after peaking at 6.95% last week.

Most new purchase loan averages declined Wednesday, except for 5/6 adjustable-rate mortgages (ARMs), which rose slightly by 4 basis points. The largest drop was seen in 7/6 ARMs, which fell by 20 basis points.

Freddie Mac Weekly Average Mortgage Rates

Freddie Mac’s weekly average for 30-year fixed mortgages dropped 6 basis points this week to 6.88%. This marks a significant decrease from the late October peak of 7.79%, the highest in 23 years. The weekly averages differ from daily averages as they incorporate rates from the previous five days and may include loans with discount points, unlike daily zero-point loan averages.

Refinancing Rate Trends

Refinancing rates have also fallen broadly, with the 30-year refinance average dropping 9 basis points. The spread between new purchase and refinance rates for 30-year loans now stands at 52 basis points. Fifteen-year refinance rates decreased by 5 basis points, and jumbo 30-year refinance rates fell by 13 points. The only refinance rate that remained steady was the 7/6 ARM.

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

Important Considerations

The rates presented here are averages and may differ from advertised teaser rates, which often involve upfront points, ideal borrower profiles, or smaller loan amounts. Your actual mortgage rate will depend on your credit score, income, loan size, and other factors.

Lowest Mortgage Rates by State

Mortgage rates differ by state due to variations in borrower credit profiles, loan types, and lender risk strategies. States like Mississippi, Louisiana, Hawaii, South Carolina, Iowa, and Kansas currently offer the lowest 30-year fixed rates, while Tennessee, Alabama, Minnesota, Arizona, and Oregon have higher averages.

Factors Influencing Mortgage Rate Changes

Mortgage rates are shaped by a complex mix of factors, including:

• Movements in the bond market, especially 10-year Treasury yields
• The Federal Reserve’s monetary policies, including bond purchasing and interest rate decisions
• Competition among mortgage lenders and loan product types

These elements interact dynamically, making it challenging to pinpoint a single cause for rate fluctuations.

In 2021, the Fed’s bond-buying program helped keep mortgage rates low amid pandemic pressures. However, starting November 2021, the Fed tapered bond purchases, ending them by March 2022. Subsequently, aggressive federal funds rate hikes of 5.25 percentage points over 16 months have indirectly pushed mortgage rates higher.

The Fed has paused rate increases as of January 31, 2024, but inflation concerns persist, suggesting caution before any rate cuts, possibly not until after March’s meeting. Most Fed members anticipate two to four rate reductions in 2024, but timing and extent remain uncertain.

Our Mortgage Rate Tracking Methodology

Our national averages are derived from over 200 top lenders, assuming an 80% loan-to-value ratio and a FICO score between 700 and 760. These averages reflect realistic quotes borrowers might expect, differing from promotional teaser rates. Our state-level data similarly assumes these parameters to offer a consistent comparison across regions.

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