US Mortgage Rates Fall for 4th Straight Week

A home for sale in Miami on Feb. 22, 2023. Joe Raedle/Getty Images

Mortgage rates are continuing the downward trend that began last month, but they remain high enough to trouble prospective buyers.

The average weekly rate for a 30-year fixed-rate mortgage hit 6.87 percent for the week ending on Feb. 12, marking the fourth consecutive weekly decline, according to data from Freddie Mac. The rate reached “its lowest level thus far in 2025,” Sam Khater, chief economist at Freddie Mac, said.

“Recent mortgage rate stability is benefitting potential buyers, as purchase demand is stronger than this time last year.

“This is an indication that a thaw in buyer activity could be on the horizon.”

Despite the four weeks of decline, the 30-year rate is still close to 7 percent, continuing pressure on prospective homebuyers. Roughly four years ago, rates were below 3 percent.

Lisa Sturtevant, chief economist at real estate data company Bright MLS, advises buyers not to attempt to “time” their home purchase so as to get the lowest possible rates, according to a Feb. 13 commentary.

“Rather, buyers should be sure they have their finances in order as they begin their home search. In addition, buyers should shop around for a mortgage to find the rate and terms that are best for them,” she said.

“Mortgage rates could be volatile in the weeks ahead, which could set us up for an unpredictable spring housing market. There is significant pent-up demand in the market. However, potential headwinds include rising inflation and economic uncertainty.”

According to data from the U.S. Bureau of Labor Statistics, 12-month inflation came in at 3 percent in January, up from December 2024. It was the fourth straight month of increase.

Before January, inflation had remained below 3 percent for every month since July 2024. The January inflation also beat market expectations.

Sturtevant said hotter-than-expected inflation “suggests that Fed rate cuts will be delayed, potentially until the summer.”

“Prospective buyers and sellers should expect mortgage rates to remain in the high-6 percent range heading into the spring market,” she said.

A recent survey by Fannie Mae showed that the net share of consumers who believe that mortgage rates are set to decline over the coming 12 months fell by 13 percentage points in January. This decline followed a surge in optimism about mortgage rates in the second half of last year.

Kim Betancourt, vice president of multifamily economics and strategic research at the company, said the lower mortgage rate optimism was “largely expected” given that rates have remained stubbornly elevated.

Mortgage Rate Issue

Elevated mortgage rates have created a “lock-in” effect: Homeowners who bought their properties when the rates were low are unwilling to sell them. Selling properties now would mean that owners may be forced to buy properties at higher mortgage rates.

However, the lock-in effect is beginning to ease off as major life events such as divorce and job changes force many homeowners to sell off their properties irrespective of how low the mortgage was on the house, according to a recent report from real estate brokerage Redfin.

“The rate-lock effect is letting up a bit here in Seattle,” local Redfin Premier real estate agent David Palmer said. “Homeowners hate to give up their 2 [percent to] 3 percent mortgage rate, but life happens and people have to move.”

Other reasons are also at play for the easing of the lock-in effect. For one, many Americans are now beginning to believe that mortgage rates are not going to fall back to the lows hit during the COVID-19 pandemic.

Secondly, since home values have surged since the COVID-19 pandemic period, many homeowners now have high enough equity to sell their property and buy a new one, even at a higher interest rate. This is especially true if the owners are looking to move to an affordable location or are downsizing.

A key factor that determines the movements of the mortgage rate is the U.S. Federal Reserve’s benchmark interest rate. The Fed has cut interest rates down to a range of 4.25 percent to 4.5 percent over the past several months.

Although investors expect more cuts, the Fed said in December 2024 that fewer rate reductions are on the agenda this year, citing issues with inflation.

Speaking before the Senate Banking Committee recently, Fed Chair Jerome Powell reiterated this outlook.

“With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” he said.

On Feb. 12, President Donald Trump called for bringing down interest rates, saying this was something that “would go hand in hand” with upcoming tariffs.