Today's Mortgage Rates - 07/31/2025

Fed, Fixed Mortgage Rates Steady

Fixed mortgage rates were little changed as the Fed stood pat this week.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) declined by two basis points (0.02%) to 6.72%. The average rate has barely moved over the last four weeks.

Average offered rates for 15-year fixed-rate mortgages managed a like-sized decline, also posting a slip of two basis points. This put the average rate for the most common shorter-term mortgage at 5.85%, its lowest rate since the beginning of July.

At present, a 5/1 ARM might offer a homebuyer a lower-cost alternative to a long-term fixed-rate mortgage, but the difference in rate between 30-year FRMs and 5-year hybrid ARMs contracted this week. The Mortgage Bankers Association said that the initial fixed interest rate on a hybrid 5-year ARM increased by twenty-one basis points (0.21%) to 6.22%, bouncing up to its highest point since early June.

With this increase, the gap in rate compared to a 30-year FRM is now only fifty (0.50%). Comparing this average rate against that one for a 30-year FRM, a homebuyer with a $300,000 loan amount who selects the 5-year ARM would be able to save $7,600 in interest cost over the first five years of the loan, while also reducing the loan's outstanding balance by a bit over $1,600 compared to the 30-year FRM.

ARMs aren't for everybody, though. To help decide whether one might work for you, read HSH's Comprehensive Guide to Adjustable Rate Mortgages.

The Fed made no change to policy this week, holding the federal funds rate steady and continuing a seven-month pause. With the economy in pretty good shape, the Fed feels comfortable waiting a little longer to see the effects of tariffs on inflation before making any policy move. Since trade deals are still being hammered out, it's not yet clear what the final impact on prices may be, but the picture should become clearer by the time the next meeting comes in mid-September.

At least through June, inflation has ticked up a little bit, an early signal that the "blanket" tariffs in place since the April "Liberation Day" announcement are starting to be reflected in consumer costs. The Fed's preferred gauge of prices (core PCE inflation) rose by 0.3% in June, its biggest bump since February and one that held the annual rate of core inflation at 2.8% for a second consecutive month. The Fed wants to see core PCE at a 2% annual pace, and there has been nearly no progress toward that goal in about a years' time.

Now the doldrums of summer, financial markets activity is usually pretty muted, and there doesn't seem much reason for mortgage rates to rise or fall very much at the moment. As such, we expect little change in them in the coming few days.

Each week in HSH's MarketTrends newsletter, we track and discuss economic conditions that affect mortgage rates and their impact on housing markets and consumers. Read the most recent edition of MarketTrends or subscribe for email delivery.