MW Mortgage rates dip to lowest level of 2025, lifting hopes for spring home-buying season

By Aarthi Swaminathan

Mortgage rates have been on a bumpy ride over the last two months

Mortgage rates fell for the fourth week in a row, offering a glimmer of hope for home buyers as the U.S. housing market approaches the busiest period of the year.

The 30-year fixed-rate mortgage rate fell 2 basis points to an average of 6.87%, which is the lowest level since Dec. 26, 2024, according to data from Freddie Mac on Thursday.

"The 30-year fixed-rate mortgage continued to inch down this week, reaching its lowest level thus far in 2025," Sam Khater, chief economist at Freddie Mac (FMCC), said in a statement.

"Recent mortgage rate stability is benefitting potential buyers, as purchase demand is stronger than this time last year," and that might be an "indication that a thaw in buyer activity could be on the horizon," he said.

Mortgage rates have been on a bumpy ride over the last two months. The 30-year rate initially jumped on Wednesday based on a separate survey of lenders by Mortgage News Daily, likely on the back of data showing rising inflation in the U.S.

The 30-year mortgage rate tends to move in tandem with the 10-year Treasury yield. The latter moved higher as financial markets revised expectations of a rate cut by the Federal Reserve due to the reports showing stronger-than-expected inflation.

Even though rates appear to have settled on Thursday, the path ahead still looks bumpy.

"Mortgage rates could be volatile in the weeks ahead, which could set us up for an unpredictable spring housing market," Lisa Sturtevant, chief economist at Bright MLS, said in a statement.

"Prospective buyers and sellers should expect mortgage rates to remain in the high 6% range heading into the spring market," she added.

Sellers could also be facing unenthusiastic buyers this spring.

Early reports indicate that some buyers are getting cold feet amid rising uncertainty and higher rates. Contracts are falling through, with the share of home-purchase agreements that were canceled in January at the highest level for that month since 2017, real-estate brokerage Redfin said on Thursday.

On the flip side, buyers could see more price cuts in certain markets as sellers adjust their expectations.

In January, one in five sellers cut the price of their listing, Zillow said. Phoenix, Tampa and Jacksonville were the top three cities, each with about a third of listings seeing a price cut.

The median price of homes sold in January was nearly $420,000, according to Redfin, up 4.1% from a year ago. One in five homes were sold over the listed price.

A year ago, the 30-year mortgage rate averaged 6.77%, according Freddie Mac data. Five years ago, during the depths of the pandemic, that figure was 3.47%.

-Aarthi Swaminathan

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February 13, 2025 12:09 ET (17:09 GMT)

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