Today's Mortgage Rates - 08/16/2025

Rates: Small Decline, but a Ten-Month Low

It only took a little dip to put rates back at last fall's levels.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) declined by five basis points (0.05%) to 6.58%, the lowest this average has been since the week of October 24, 2024.

Average offered rates for 15-year fixed-rate mortgages saw a slightly smaller decline, posting a drop of four basis points (0.04%), putting the average rate for the most common shorter-term mortgage at 5.71%. The current average matches the same 10-month low level as its longer-term counterpart.

With markets starting to posture themselves for a potential cut in short-term rates next month, rates for 5-year hybrid ARMs moved down more appreciably. The Mortgage Bankers Association said that the initial fixed interest rate on a hybrid 5-year ARM decreased by twenty-six basis points (0.26%) to 5.80%,

At present, a 5/1 ARM might offer a homebuyer a lower-cost alternative to a long-term fixed-rate mortgage, and the difference in rate between 30-year FRMs and 5-year hybrid ARMs expanded a fair bit this week. With the decrease, the gap in rate compared to a 30-year FRM is now seventy-eight basis points (0.78%). 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 $11,731 in interest cost over the first five years of the loan while also reducing the loan's outstanding balance by over $2,600 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.

Concerns about weaker labor market conditions helped longer-term yields decline late last week and into this one, dragging mortgage rates down along with them. A bit more downward pull was seen after Tuesday's Consumer Price Index for July came in as expected, and happened even though the 0.3% increase it showed in the so-called "core" CPI lifted core consumer inflation back up to a 3.1% annual rate, the highest it has been since February. The core inflation rate excludes food and energy prices from its calculation.

The optimism that tariff-related price increases would remain muted and contained was strongly diminished on Thursday, when the Producer Price Index shot up by 0.9%, the largest one-month jump in more than three years. This kicked the annual rate of PPI from 2.4% in June to 3.3% for July, a large step in the wrong direction. In the report, goods prices rose by 0.7% and services by a stout 1.1%, so increase in costs were widespread.

The PPI report gave investors pause, and the influential yield on the 10-year Treasury returned to levels seen at the start of the week, erasing all the goodwill that the CPI report had provided. This suggests that mortgage rates have stabilized at present levels at best, and most likely will tick slightly higher 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.