The rate on an average 30-year fixed rate mortgage (FRM) advanced to 7.04% in the week ending January 17, 2025. The average 15-year FRM grew to 6.27%.
Watch for FRM rates to generally work their way lower in 2025 as the Fed completes its job to fully stabilize consumer inflation (and job growth) following the pandemic disruption. The FRM rate decrease through 2025 is expected to be followed by a long-term upward trend, which began in 2013 at the outset of a half-cycle with some 30 years of rising rates on all borrowing.
That said, current political interference with the economy may spill over into 2025. That might cause bond investors to drive 10-year T-Notes further up as seen in the past few months. Cutting income tax rates adds to debt as well as privatizing quasi-government mortgage agencies put pressure on rates to stay high.
In the long term, property sellers suffer from high FRM rates. Property pricing is primarily supported by the amount a buyer can borrow to fund a purchase. Thus, annual increases in FRM rates force most sellers to eventually drop prices or exit the market.
As for buyers dependent on purchase-money mortgage funding, they either:
- reduce their standard of living or investment goals and acquire property in a lower price tier, or,
- wait out the drop in asking prices until pricing matches their reduced purchasing power, the more likely situation.
Buyers increasingly sense current economic conditions are incompatible with the double whammy of a purchase of over-priced property and mortgage funding reduced by high rates. The result is more buyers are heading for the sidelines — ready, but not willing or able. However, patient buyers and their agents will, maybe by 2027, discover their situation greatly improving. Watch for-sale inventories to grow, sellers forced to cut prices to unload property they no longer want, and mortgage rates to then lower.
Fundamentally, FRM rates are tied to the 10-year Treasury note market, as are capitalization (cap) rates for setting income property prices. The 30-year FRM rate moves in tandem with the 10-year Treasury note rate, plus the lender’s risk premium of between 1.5% and 3.0%, based on risk of default. Historically, the risk premium spread between the 10-year T-Note rate and the 30-year FRM rate in normal times is 1.5%. The spread is far greater for cap rates.
However, the 10-year T-Note contracted to 4.62% on January 17, 2025. Thus, the spread between the 10-year T-Note and 30-year FRM rate is 2.42%, above the historical risk premium spread of 1.5%. Today’s spread indicates lenders have started to reduce their risk premiums in an apparent effort to increase mortgage originations to maintain profitable operations.
The average monthly rate on adjustable rate mortgages (ARMs) is less steady, rising to 6.6% on January 17, 2025 after briefly spiking to 6.88% in the second half of December following a summerlong trough.
The interest rate on the ARM is higher than the 15-year FRM and 44 percentage points lower than the 30-year FRM rate — with the limited advantage of a 30-year ARM not worth the significant forward risks of loss inherent in ARMs. Today, a riskier ARM is rather useless to buyers seeking to increase their borrowing capacity when purchasing low- or mid-tier price homes.
This inversion in ARM rate over the FRM rates has eliminated the appeal of ARMs except in mortgage-financed high-tier housing and commercial property.
The following was updated January 17, 2025.
Click the link to go directly to a chart, or browse the charts by scrolling below.
1. 30-year fixed rate mortgage (FRM) rate, weekly— Chart update 1/17/2025
2. 30-year FRM rate, monthly — Chart update 1/3/2025
3. 15-year FRM rate — Chart update 1/17/2025
4. 5/1 adjustable rate mortgage (ARM) rate, monthly — Chart update 11/01/24
5. 10-year Treasury note rate — Chart update 1/17/2025
6. Combined FRM and 10-year Treasury note rates — Chart update 11/15/24
7. 91-day Treasury bill rate — Chart update 1/17/2025
8. 3-month Treasury bill — Chart update 11/15/24
9. 6-month Treasury bill — Chart update 11/15/24
10. Treasury Securities average yield (CMT) — Chart update 11/15/24
11. 12-month Treasury average — Chart update 11/15/24
12. Secured Overnight Financing Rate (SOFR) — Chart update 1/17/2025
13. Applicable federal rates — Chart update 1/3/2025
 | ||
| Chart update 1/17/25 | ||
Current | Month ago 12/19/24 6.72% | Year ago 1/19/2024 6.60% |
The average 30-year FRM rate in California is provided by the St. Louis Federal Reserve Bank.
| ||
 | ||
| Chart update 1/3/25 | ||
Dec 2024 Average 6.74% | Nov 2024 Average 6.79% | Dec 2023 Average 6.90% |
 | ||
| Chart update 1/17/25 | ||
Current 1/16/25 6.27% | Month ago 12/19/24 5.92% | Year ago 1/19/24 5.76% |
The average 15-year FRM rate in California is provided by the St. Louis Federal Reserve Bank.
| ||
 | ||
| Chart update 11/01/24 | ||
Oct 2024 6.55% | Sep 2024 6.12% | Oct 2023 7.18% |
The 5/1 average adjustable rate mortgage (ARM) rate shows the average rate for the first five years after origination. After the initial five-year period, the ARM rate is adjusted annually based on an index figure, such as a certain Treasury Bill rate (which reflects Federal Reserve rate movements) or the Secure Overnight Financing Rate (SOFR). The average ARM rate is provided by Freddie Mac’s survey of the Western Region of the U.S. | ||
 | ||
| Chart update 1/17/25 | ||
Current 1/17/25 4.62% | Month ago 12/20/24 4.52% | Year ago 1/19/24 4.13% |
This rate is a leading indicator of the direction of future Freddie Mac rates. The 10-year rate historically runs closer to 4% during a stable money market. The rate is influenced by worldwide demand for the dollar and anticipated future domestic inflation. | ||
 | ||
| Chart update 11/15/24 | ||
Avg 15-Year Oct 2024 5.50% | Avg 30-Year Oct 2024 6.35% | Avg 10-Year T-Note Oct 2024 4.57% |
The average 15- and 30-year conventional commitment rates are the rates at which a lender commits to lend mortgage money in the United States-West/California for the duration of the life of each respective mortgage as reported by Freddie Mac. The green line reflects the 10-Year Treasury Note Average, a leading indicator of the direction of future Freddie Mac rates. It is comprised of the level of worldwide demand for the dollar and anticipated future domestic inflation.
| ||
 | ||
| Chart update 1/17/25 | ||
Current 1/16/25 4.33% | Month Ago 12/20/24 4.36% | Year Ago 1/18/24 5.23% |
This rate determines the minimum interest rate the seller must use in a delayed §1031 transaction and report when not receiving interest on §1031 monies held by a facilitator/accommodator. This rate also sets the amount of the ordinary income the facilitator/accommodator must report. | ||
 | ||
| Chart update 11/15/24 | ||
Oct 2024 4.51% | Sep 2024 4.72% | Oct 2023 5.34% |
The 3-Month Treasury Bill is the rate heavily influenced by the Federal Reserve through the Fed Funds Rate as the base price of borrowing money in the short-term. It is used in determining the 3-month:10 year yield spread used to predict the likelihood of a recession one year forward. The posted rate is the monthly average for the listed month. Rates are released with a 1-2 month reporting delay.
| ||
 | ||
| Chart update 11/15/24 | ||
Oct 2024 4.30% | Sep 2024 4.42% | Oct 2023 5.33% |
The six-month T-Bill rate is one of several indices used by lenders to periodically adjust the adjustable rate mortgage (ARM) rate. The adjusted rate equals the indexed rate (at the time of adjustment or an average of several prior rates) plus the lender’s profit margin. The posted rate is the monthly average for the listed month. Rates are released with a 1-2 month reporting delay. | ||
 | ||
| Chart update 11/15/24 | ||
Oct 2024 4.20% | Sep 2024 4.03% | Oct 2023 5.42% |
This index is one of several indexes used by lenders as stated in their ARM note to periodically adjust the note’s interest rate. The ARM interest rate equals T-Bill yield, plus the lender’s profit margin. The index is an average of T-Bill yields with maturities adjusted to one year. | ||
 | ||
| Chart update 11/15/24 | ||
Oct 2024 4.83% | Sep 2024 4.93% | Oct 2023 5.01% |
This index is one of several indices used by lenders as stated in their ARM note to periodically adjust the note’s interest rate. This figure is an average of the one-year T-Bill rates for the past 12 months. The ARM interest rate equals the 12-Month Treasury Average yield plus the lender’s profit margin. There is a one-to-two month lag in data reporting for the 12-Month Treasury Average. | ||
 | ||
| Chart update 1/17/25 | ||
Current 1/16/25 4.29% | Month ago 12/20/24 4.30% | Year ago 1/19/24 5.31% |
This index is one of several indices used by lenders as stated in their ARM note to periodically adjust the note’s interest rate. It replaced the LIBOR in 2021, which was found to be manipulated in the years leading up to the 2008 recession and financial crisis. The ARM interest rate equals the SOFR rate plus the lender’s profit margin. The rate is based on overnight borrowing in the U.S. Treasury repo market. The SOFR is produced in a transparent manner and is based on observable transactions, rather than models, and, unlike the LIBOR, is not dependent on bank estimates. | ||
 | ||
| Chart update 1/3/25 | ||
Short (3 years or less) Jan 2025 3.23% | Medium (3 to 9 years) Jan 2025 3.17% | Long (9+ years) Jan 2025 3.38% |
These rates determine minimum interest yield reportable on carryback financing. The AFR category is determined by the carryback due date. Rates are for monthly payments, reported for the coming month.
| ||
Excellent Set of GRAPHS 4 THE PUBLIC! 2 BAD THEY CAN’T UNDERSTAND IT UNLESS THEY HAVE A BUSINESS DEGREE LIKE ME!
Invest in property …while the rates are extremly low and our market prices in Ca.are half of the price as a home or piece of land 8-9 years ago. It may be years before we have a total recovery and the home price may not go up to where it was, butit is the best way to invest and cheaper to buy then to rent.
Where are you seeing the 1/2 prices?
How low can it go? The U.S. government–up to its ears in debt–is still able to borrow at unbelievably low rates (well under 2%) from foreign investors. That ability is currently based solely on the belief that American will always pay its debts and is a good investment risk.
How about a little glimpse of macro-economics?
Now could that perception ever change? If ever the foreign investors come to decide that America might not pay its debts, then we would see a sudden rise in interest rates that would boggle the mind, kicking off a massive inflation in consumer goods or plunging us into a deeper depression with deflation—take your pick.
The U.S. government runs on borrowed money—borrowed from foreign investors.
FACT: The massive U.S. debt as it currently stands, could NEVER be paid off. But if the dollar were devalued (as Roosevelt did in 1934) the debt might be paid off in cheaper dollars. This would be concomitant with a rise in the Chinese yuan.
Here’s the catch: This would be done on the backs of the American people, as it would likely spur massive inflation and cause a spike in interest rates.
With rates so low, and other investment vehicles so turbulent, it would make perfect sense to invest in housing for rental income at this time.
ditto
Concise information, clearly explained. Good stuff!
Still more good news”
helpful Synopsis
You guys are great and I look to you for unadulterated truth.
No fear of me straying with great articles like this.
Next time I renew u can bet its with your program.
Really appreciate your continued current info on all types of market rates, sales, home prices, etc. Very useful for those of us working this business every single day.
Thank you for all of the great info and data each month!
Hi ,
This is a very helpful analysis. Keep it up monthly for those that are serious about following ARMs.