Today's Mortgage Rates - 09/07/2025

Another Step Down For Rates

It was another drift downward for mortgage rates this week.

As reported by Freddie Mac today, the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) declined by six basis points (0.06%) to 6.50%, still a ten-moth low. The most popular mortgage type and term has declined by a quarter of a percentage point over the last seven weeks.

The average offered rate for 15-year fixed-rate mortgage also resumed a downward trek, posting a nine basis point (0.09%) decline of its own, landing at 5.60%, a level last seen in mid-October 2024.

An alternative to the 30-year fixed rate mortgage, the average offered rate for a 5-year hybrid ARM eased a bit less than its fixed-rate counterparts. The Mortgage Bankers Association said that the initial fixed interest rate on a hybrid 5-year ARM decreased by four basis points (0.04%) to 5.90%,

Currently, a 5/1 ARM might offer a homebuyer a lower-cost alternative to a long-term fixed-rate mortgage, although the difference in rate between 30-year FRMs and 5-year hybrid ARMs narrowed slightly this week. With the change in rates, the gap in rate compared to a 30-year FRM is now 60 basis points (0.60%). Comparing this average rate against one for a 30-year FRM, a homebuyer with a $300,000 loan amount who selects the 5-year ARM would have a monthly payment that is $116.79 lower, will spend $9,025 less in interest cost and pay off an additional $2,017 in principal over the first five years of the loan compared to a 30-year fixed rate loan.

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

At the moment, what's happening with labor market conditions is key to what happens to mortgage rates and Federal Reserve policy. Softer or weaker conditions and rates will ease somewhat; firmer and they will steady or perhaps even rise slightly. We're presently on the "ease" side of the ledger as we await the August employment report on Friday September 5.

Two indicators out this week have helped longer-term rates tick downward; the Job Openings and Labor Turnover Survey showed a decline in job openings in July and an upturn in dismissals. July saw the fewest available positions since last September, and the number of layoffs was the highest since then as well. Weakening labor conditions last year were a primary reason the Fed cut rates by a half-percentage point to kick off the new cycle for monetary policy. That said, conditions are a little different now than then.

Initial claims for unemployment benefits also turned slightly higher this week. While not an especially concerning rise on its own, there has been a general uptrend in initial claims since a mid-July recent bottom, so the direction is somewhat less favorable. Also not as encouraging is that when folks are losing jobs, they are having more difficulty locating new ones, and ongoing benefits claims remain near a three-year high. As noted above, there are fewer job openings to be found and companies have turned cautious in their hiring.

The softer labor news continues to press down on mortgage rates. If the employment report for August comes in on the weak side, they may turn lower still. That's also the case if annual revisions to job-creation numbers out next week subtract from the totals of April 2024 through March 2025. It's hard to reckon what the size of those impacts may be, but for now, mortgage rates appear headed slightly lower again over the next day at least.

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.