Mortgage rates reach 2025 low despite inflation surge

Even as hotter-than-expected inflation pushed up Treasury yields, average mortgage rates came in lower for a fourth straight week, Freddie Mac said.

The 30-year fixed rate decreased 2 basis points to 6.87% for the week ending Feb. 13, according to Freddie Mac's Primary Mortgage Market Survey. The average eased back from 6.89% seven days earlier but was still higher from where it stood in the same week of 2024, when it was at 6.77%.

"The 30-year fixed-rate mortgage continued to inch down this week, reaching its lowest level thus far in 2025," said Freddie Mac's Chief Economist Sam Khater in a press release. 

At the same time, the 15-year fixed rate headed in the other direction, rising to 6.09% compared to 6.05% one week prior. The 15-year rate was 3 basis points below its 6.12% average of a year ago.

The movement of the 30-year rate ran counter to what might have been expected based on 10-year Treasury yields. After closing at 4.44% on Feb. 6, the 10-year jumped as high as 4.64% on Wednesday afternoon following the release of January's inflation report. 

"Mortgage rates are tied to bonds, and inflation is their biggest enemy because it erodes the purchasing power of fixed-income returns. As inflation rises, investors demand higher interest rates to compensate for their reduced buying power," said Samir Dedhia, CEO of One Real Mortgage in a statement issued Wednesday evening.

Although consumer prices came in higher than economists' estimates, some categories showed easing, while jobless claims also came in lower than expected, possibly lessening the blow to mortgage borrowers. Yields of 10-year Treasurys pulled back to 4.54% by midday Thursday as investors deciphered the numbers.

This week's decline is the latest in a stretch that has seen gradual pullbacks in the Freddie Mac PMMS following the Federal Reserve's recent decision to pause its funds rate in late January. The recent stability has brought some benefits to the housing market, with purchase demand stronger year over year, Khater said. 

"This is an indication that a thaw in buyer activity could be on the horizon," he noted.

In its weekly survey of lenders, the Mortgage Bankers Association similarly found the 30-year conforming rate easing at the end of last week. The downward movement brought with it a rush of refinance activity, but purchase loans, while coming in higher than a year ago, were sluggish to start February.

Purchase sentiment is also not the same as a year ago, even with the higher demand, said Zillow senior economist Kara Ng.

"Last January was marked by optimism as mortgage rates fell from nearly 8% to the mid-6% range, encouraging buyer activity and a sense of renewed confidence in the housing market," she said.

"In contrast, this January is characterized by uncertainty, as stubborn inflation and elevated rates create a more challenging environment for buyers," she added.

Uncertainty regarding President Trump's proposed tariffs as well as other economic factors, means mortgage rate movements could be difficult to forecast, remarked Dedhia, who said he expects persistent market volatility. 

"Although rate fluctuations will gradually stabilize as the year progresses, it's important to recognize that 2025 remains in its early stages, and a variety of factors could still drive volatility in the months ahead."

Some evidence of unpredictable patterns were apparent in other rate indicators on Thursday. Lender Price's dashboard, which is featured on National Mortgage News' home page, showed the 30-year average at 6.99% in the morning before dropping back to 6.93% by midday. Last week, the average sat at 6.9%. 

Zillow's rate tracker similarly showed a bump up in the average 30-year rate from seven days ago, with the fixed average clocking in at 6.65% on Thursday. The rate accelerated from 6.58% last week, but was 2 basis points lower from Wednesday's average of 6.67%.