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How are our long-range forecasts panning out? See the Mid-year review of our 2025 Mortgage and Housing Market Outlook.

How are our long-range forecasts panning out? See the Mid-year review of our 2025 Mortgage and Housing Market Outlook.

Today's Mortgage Rates - 07/25/2025

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Mortgage Rates Edge Down

Bobbing and weaving of late, mortgage rates eased a little this week.

As reported by Freddie Mac today, the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) declined by a single basis point (0.01%) to 6.74%. It has essentially been unchanged for the last three weeks.

Average offered rates for 15-year fixed-rate mortgages managed a slightly larger fall, posting a slide of five basis points. This put the average rate for the most common shorter-term mortgage at 5.87%, erasing a recent upward blip.

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 little this week. The Mortgage Bankers Association said that the initial fixed interest rate on a hybrid 5-year ARM decreased by seven basis points, erasing a like-sized rise the previous week and returning to 6.01%.

With the decrease, the gap in rate compared to a 30-year FRM is now sixty-six basis points (0.66%). 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 nearly $11,000 in interest cost over the first five years of the loan, while also reducing the loan's outstanding balance by nearly $2,400 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.

High mortgage rates continue to damp the housing market, and home sales in June were pretty soggy. Existing home sales declined by 2.7% compared to May, and the 3.93 million annualized pace of sales is the slowest since last September. Slack sales and growing numbers of homes for sale still haven't fostered lower prices; in fact, the median price of an existing home sold last month just hit a new all-time high of $435,300 according to the National Association of Realtors. Combined with high mortgage rates, home affordability continues to be the number one problem facing the housing market.

Sales of new homes last month were also soft, but did manage a modest 0.6% improvement after May's 11.6% plummet. There is plenty of inventory available to buy in the new home market with 9.8 months of supply available at the present rate of sale. Assisted by builder discounts, the median cost of a new home sold in June was 2.7% lower than in May, and at $401,800 represents a relative bargain compared to the existing home market.

Overcoming high housing costs requires significantly lower mortgage rates, but they aren't in the offing. The yields which most influence fixed mortgage rates declined through late Tuesday, but have firmed again, and that suggests we'll see level to perhaps slightly higher mortgage rates in the next 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.

Week 30-year-Fixed 15-year-Fixed
07/24 6.740% 5.870%
07/17 6.750% 5.920%
07/10 6.720% 5.860%
07/03 6.670% 5.800%
06/26 6.770% 5.890%
06/18 6.810% 5.960%
06/12 6.840% 5.970%
06/05 6.850% 5.990%
05/29 6.890% 6.030%
05/22 6.860% 6.010%
05/15 6.810% 5.920%
05/08 6.760% 5.890%

Mortgage Choices at a Glance

Loan type/terms Fixed 30 years Fixed 15 years/
20 Years
Hybrid ARM Traditional ARM Balloon Mortgage
Rate changes
  • Never; Fully fixed for entire term
  • Never; Fully fixed for entire term
  • Usually after fixed period of 3, 5, 7 or 10 years
  • After that, annual change typical
  • Fully variable
  • Typically changing at one-year intervals
  • Some have shorter change intervals
  • Never; Fully fixed for entire term
Benefits
  • Low, stable payment
  • Usually easiest qualification
  • Stable payments
  • Builds equity faster
  • Lower total interest costs than 30-year term
  • Lower rates than fully fixed-rate mortgage
  • Can sometimes borrow larger loan amount for same income
  • Can have lowest interest rates
  • Qualification may not depend upon today's interest rate
  • Often has lower interest rate/monthly payment over balloon period than fixed rate
  • Similar to hybrid ARM
Drawbacks/Risks
  • Can have highest total interest cost over time
  • User may "buy" more rate stability than actually needed, increasing cost
  • Requires higher income to qualify
  • Less affordable monthly payment
  • Funds commited to payment cannot be used elsewhere
  • Stable payment for a number of years, then unpredictable
  • Rates can jump by as much as 6 percentage points at first adjustment
  • Payments fluctuate at each rate change
  • Unpredictable, rates can change as much as 2 percentage points at each adjustment
  • Loan fully due and payable when balloon period ends
  • Must be paid off or refinanced in unknown market conditions
Alternative strategy
  • Consider Hybrid ARM with appropriate fixed period
  • Consider 30-year term and prepaying loan to preserve cash-flow flexibility
  • Consider Fixed rate mortgage or longest possible fixed period, if loan hold period not known
  • Consider Hybrid ARM to ameliorate rate and payment risks for a given period
  • Consider Hybrid ARM to ensure continued loan availability
These may be useful for...
  • Purchasing a home
  • First-time homebuyers
  • Refinancing to improve cash flow/lower payment
  • Refinancing to lower total interest cost
  • Retiring mortgage more quickly
  • Building or rebuilding equity more quickly
  • Purchasing or refinancing when time horizon is seven years or shorter, and where borrower can handle increase in monthly payments
  • Purchasing or refinancing when interest rates are near top of cycle, and are likely to fall, or sale or refinance is anticipated within three years
  • Purchasing or refinancing when time horizon is three years or longer and home will be sold prior to end of balloon period
Consider if
  • Buying or refinancing a home and planning on owning for longer than 10 years
  • Buying second home
  • Refinancing to build equity
  • Paying off mortgage before life event (retirement, etc)
  • Buying a home and expect to move before fixed period ends, or know income will rise to offset payment risk, even in worst-case scenario
  • Buying or refinancing when income can handle frequent payment changes and worst-case scenario for rates over a four-year period
  • Buying a home and expect to move before balloon period ends, or have resources to pay off mortgage if refinance not available
When shopping, ask about
  • "Full cost" vs. "No cost" refinances, prepaying loan to shorten term if desired
  • If 20-year term makes payment too high, whether 25-year term is available
  • Interest rate caps, for first and subsequent adjustments, worst-case scenario
  • A history of the Index the loan is keyed off, margin and caps
  • Whether or not there is any built-in refinancing option when the balloon period ends
Useful tools & resources

Latest Mortgage Rate Analysis

HSH's longer-range outlook for mortgage rates, where we review our last forecast,discuss current market influences and provide our expectations for mortgage rates over the next nine weeks.

Mortgage Calculators

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