Mortgage rate news this week - Feb. 20, 2025

Mortgage rates dip, still stuck at 7%

Mortgage rates moved down this week, with 30-year fixed-rate loans averaging 7.00 percent, according to Bankrate’s latest lender survey.

While housing economists and homebuyers have been waiting for mortgage rates to fall, those hopes suffered a setback last week, when the Labor Department said inflation is back up to 3 percent. Stubbornly high inflation means that rates are likely to stay higher for longer. The Federal Reserve announced no change to its benchmark federal funds rate at its first meeting of 2025, coming off three consecutive rate cuts that started in September.

Even the long-awaited Fed cuts didn’t play out as expected. When the central bank first started cutting, housing economists fully expected the Fed’s policy to bring back sub-6 percent mortgage rates. Instead, 30-year rates have lingered at or above 7 percent throughout 2025. Despite the Fed's decision to hold rates steady, the central bank does not set mortgage rates — that influence comes mostly 10-year Treasury bond yields.

Learn more: Weekly mortgage rate trend predictions

How to compare mortgage rates

The rates you see advertised here might not exactly match the rate you're offered due to factors like your credit score, down payment and more. Still, getting the best possible rate on your mortgage can make a big difference in your monthly budget, and potentially thousands saved in interest over the life of the loan. You won’t know what rates you qualify for, though, unless you narrow down the best type of mortgage for your situation and comparison-shop. Here’s how:

• Decide on the right type of mortgage. Consider your credit score and down payment, how long you plan to stay in the home, how much you can afford in monthly payments and whether you have the risk tolerance for a variable-rate loan versus a fixed-rate loan. Our mortgage calculator can help you estimate your monthly mortgage payment in various scenarios.
• Shop around. Mortgage rates change often and vary widely by lender, loan type and term. When comparing lenders, pay attention to the APR, not just the interest rate. The APR, or annual percentage rate, reflects the total cost of the loan, including the interest rate and other fees.
• See what others have to say. Check out our mortgage lender reviews to learn more about the lender's offerings and service, as well as testimonials to gauge how past customers rate their experience.
• Get preapproved. Before you shop for a home, get preapproved for mortgage financing with at least three lenders. This'll help you uncover the best possible rate and allow you to make an offer quickly when you find the right home. (Keep in mind, getting preapproved with a lender doesn’t mean you ultimately have to apply for a mortgage with that lender.)

Factors that determine your mortgage rate

Your mortgage rate depends on a number of factors, including your individual credit profile and what’s happening in the broader economy. These variables include:

• Your credit and finances: The better your credit score, the better interest rate you’ll get. The same goes for the size of your down payment and the amount of debt you carry: Generally, if you have more money to put down, you’ll get a lower rate. If you have additional debt, your rate might be higher.
• Loan amount: The size of your loan can impact your rate.
• Loan structure: Your rate varies whether you’re obtaining a fixed-rate or adjustable-rate loan. It also depends on the length of the loan (for example, 30 years or 15 years).
• Location of the property: Rates vary depending on where you’re buying.
• Whether you’re a first-time homebuyer: Many first-time homebuyer loan programs include a lower-rate mortgage.
• Economic factors: Broadly, mortgage rates are impacted by forces like the Federal Reserve, inflation and investor appetite.
• The lender you work with: Lenders set rates based on many factors, including their own supply and demand.
• Mortgage points. Mortgage points, also referred to as discount points, help homebuyers reduce their interest rate and monthly mortgage payments. Each point typically lowers an interest rate by 0.25 percentage points. For example, one point would lower a mortgage rate of 6 percent to 5.75 percent. The cost of a point is typically 1 percent of the total amount borrowed. For more details, see Bankrate’s guide to mortgage points.
• The size of your down payment. If you put down less than 20 percent of the purchase amount, you may pay a higher rate.

How does the Federal Reserve affect mortgage rates?

Like any other financial product, the cost of a mortgage fluctuates with the happenings of the economy, including Federal Reserve decisions. The central bank doesn’t set specific mortgage rates, but its policies set the tone for what banks and other lenders charge for loans.

How to refinance your current mortgage

Next steps to getting a mortgage

Before you start applying for a mortgage, here are some mortgage resources to prepare you for the process:

Meet our Bankrate experts

Written by: Jeff Ostrowski, Principal Reporter, Mortgages

I cover mortgages and the housing market. Before joining Bankrate in 2020, I spent more than 20 years writing about real estate and the economy for the Palm Beach Post and the South Florida Business Journal. I’ve had a front-row seat for two housing booms and a housing bust. I’ve twice won gold awards from the National Association of Real Estate Editors, and since 2017 I’ve served on the nonprofit’s board of directors.

Read more from Jeff Ostrowski

Edited by: Laurie Richards, Editor, Home Lending

I’ve spent five years in writing and editing roles, and I now focus on mortgage, mortgage relief, homebuying and mortgage refinancing topics. I’m most interested in providing resources for aspiring first-time homeowners to help demystify the homebuying process. In 2021, I earned a Poynter ACES Certificate in Editing. I have an MA in English.

Read more from Laurie Richards

Reviewed by: Greg McBride, CFA, Chief Financial Analyst, Bankrate

Greg McBride is a CFA charterholder with more than a quarter-century of experience in personal finance, including consumer lending prior to coming to Bankrate. Through Bankrate.com's Money Makeover series, he helped consumers plan for retirement, manage debt and develop appropriate investment allocations. He is an accomplished public speaker, has served as a Wall Street Journal Expert Panelist and served on boards in the credit counseling industry for more than a decade and the funding board of the Rose Foundation’s Consumer Financial Education Fund.

Read more from Greg McBride