Today's Mortgage Rates - 08/07/2025

Labor Concerns, Lower Rates

Mortgage rates retreated after a soft jobs report last Friday.

As reported by Freddie Mac today, the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) declined by nine basis points (0.09%) to 6.63%. This is its lowest level since early April.

Average offered rates for 15-year fixed-rate mortgages managed a slightly larger decline, posting a drop of ten basis points (0.10%). This put the average rate for the most common shorter-term mortgage at 5.75%. By a slight margin, this is as low as this rate has been since October 2024.

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 slightly this week. The Mortgage Bankers Association said that the initial fixed interest rate on a hybrid 5-year ARM decreased by sixteen basis points (0.16%) to 6.06%,

With this decrease, the gap in rate compared to a 30-year FRM is now fifty-seven basis points (0.57%). 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 $8,500 in interest cost over the first five years of the loan while also reducing the loan's outstanding balance by a bit almost $1,900 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.

Although the Fed made no change to policy last week, it might have if updated information regarding labor conditions was available. While the 73,000 jobs created in July was pretty close to the expected trend, revisions for June and May estimates subtracted 258,000 jobs thought to have been created during those months. As such, the labor market is rather cooler that was thought to be the case.

While the Fed didn't move, investors did, and took the new information to suggest that the Fed is now considerably more likely to be cutting rates this fall and perhaps into the winter, too. Odds of a September cut in rates have risen appreciably in recent data, and long-term interest rates have declined a little on the signs that the economy may be turning more sluggish. Whether expectations for a cut in rates will come to fruition remains to be seen, as labor conditions may only be reflecting a rough stretch as businesses continue to deal with uncertainty regarding tariff and other policies.

After a drop last Friday, the underlying yields that most influence mortgage rates have flattened out at a lower level. As such, it doesn't seem as though a continued decline in mortgage rates is to be expected in the coming 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.