Mortgage Rates Take a Dive Is Now the Time to Lock In?

Mortgage and Refinance Interest Rates Today, June 5, 2025: Bond Rally Sparks Lower Mortgage Rates

The housing market continues to be dynamic, with interest rates responding to various economic factors. This week brings welcome news for potential homebuyers and those looking to refinance, as mortgage interest rates have edged downwards, fueled by a bond market rally.

According to Freddie Mac, the average 30-year fixed mortgage rate has decreased by four basis points, landing at 6.85%. This movement offers a slight reprieve compared to the past year, where the 30-year rate fluctuated between a low of 6.08% and a high of 7.04%. Similarly, the 15-year fixed rate also saw a four-basis-point reduction, settling at 5.99%.

The dip in mortgage rates is largely attributed to the 10-year Treasury yield, which has fallen by 0.66% over the past week. Historically, mortgage rates closely mirror the 10-year Treasury yield, typically maintaining a spread of 2% or more.

If you're contemplating locking in a mortgage rate, keeping a close watch on daily fluctuations could prove beneficial. Should the downward trend persist, now might be an opportune moment to secure a favorable rate. The sub-6% 15-year fixed rate is also worth noting.

Current Mortgage Rates

Here's a snapshot of today's mortgage rates, as per the latest data from Zillow:

• 30-year fixed: 6.70%
• 20-year fixed: 6.24%
• 15-year fixed: 5.91%
• 5/1 ARM: 6.67%
• 7/1 ARM: 6.97%
• 30-year VA: 6.30%
• 15-year VA: 5.64%
• 5/1 VA: 6.35%

Please remember: These figures represent national averages, rounded to the nearest hundredth.

Today's Mortgage Refinance Rates

If you're considering refinancing your mortgage, here are the current refinance interest rates, based on Zillow's latest data:

• 30-year fixed: 6.75%
• 20-year fixed: 6.26%
• 15-year fixed: 5.98%
• 5/1 ARM: 7.03%
• 7/1 ARM: 6.98%
• 30-year VA: 6.32%
• 15-year VA: 5.94%
• 5/1 VA: 6.21%

It's worth noting that refinance rates can sometimes be higher than purchase mortgage rates, although this isn't always the case.

Understanding Mortgage Rates

A mortgage interest rate is essentially the cost of borrowing money from a lender, expressed as a percentage. There are two primary types: fixed and adjustable rates.

• Fixed-Rate Mortgage: This locks in your rate for the entire loan term. For example, a 30-year mortgage at 6% will maintain that rate for the duration, unless you refinance or sell.


• Adjustable-Rate Mortgage (ARM): This offers a fixed rate for an initial period, after which it adjusts periodically. A 5/1 ARM with a 6% introductory rate would remain at 6% for five years, then adjust annually for the remaining 25 years based on economic and housing market conditions.

Factors Influencing Mortgage Rates

Mortgage rates are influenced by a mix of factors, some of which you can control:

• Controllable Factors:
  • Shop Around: Compare rates from different lenders to find the best deal.
  • Improve Your Financial Profile: Lenders offer better rates to those with higher credit scores, lower debt-to-income ratios, and larger down payments.


• Uncontrollable Factors:
  • The Economy: Economic conditions play a significant role. During economic struggles, rates tend to decrease to stimulate borrowing. In a strong economy, rates often increase to curb spending.

30-Year vs. 15-Year Fixed Mortgages

Choosing between a 30-year and 15-year fixed-rate mortgage depends on your financial goals and risk tolerance.

• 30-Year Mortgage: Offers lower monthly payments due to the longer repayment period, but you'll pay more interest over the life of the loan.


• 15-Year Mortgage: Comes with a lower interest rate and allows you to pay off your mortgage faster, saving you money in the long run. However, monthly payments are higher.

In essence, 30-year mortgages are more budget-friendly month-to-month, while 15-year mortgages are more economical overall.

Current Mortgage Rates: FAQs

• What bank is offering the lowest mortgage rates?
According to 2024 Home Mortgage Disclosure Act (HMDA) data, some of the banks with the lowest median mortgage rates are Bank of America and Citibank. However, it's a good idea to shop around for the best rate with not just banks, but also credit unions and companies specializing in mortgage lending.
• Is 2.75% a good mortgage rate?
Yes, 2.75% is a fantastic mortgage rate. You're unlikely to get a 2.75% rate in today's market unless you take on an assumable mortgage from a seller who locked in this rate in 2020 or 2021, when rates were at all-time lows.
• What is the lowest-ever mortgage rate?
According to Freddie Mac, the lowest-ever 30-year fixed mortgage rate was 2.65%. This was the national average in January 2021. It is extremely unlikely that rates will dip below 3% again anytime soon.
• At what rate should you refinance your mortgage?
Some experts say it's worth refinancing when you can lock in a rate that's 2% less than your current mortgage rate. Others say 1% is the magic number. It all depends on what your financial goals are when refinancing and when your break-even point would be after paying refinance closing costs.

The recent dip in mortgage rates offers a glimmer of hope for those navigating the complexities of the housing market. While these fluctuations can be influenced by numerous factors, staying informed and understanding the dynamics at play is key to making sound financial decisions. As always, consulting with a qualified financial advisor is recommended to tailor a strategy that aligns with your individual circumstances and goals.

Source: https://finance.yahoo.com/personal-finance/mortgages/article/mortgage-refinance-rates-today-thursday-june-5-2025-100100045.html