Mortgage rates fall despite rising inflation

Mortgage rates have slightly decreased this week, hinting at a potential revival in the housing market. This development comes amid a new report from the Labor Department showing that U.S. inflation increased last month.

The average rate for 30-year fixed home loans dropped to 6.87% for the week ending February 13, down from 6.89% the previous week, as reported by Freddie Mac. Last year during the same period, rates averaged 6.77%.

Freddie Mac Chief Economist Sam Khater commented on this trend: “The 30-year fixed-rate mortgage continued to inch down this week, reaching its lowest level thus far in 2025.” Although mortgage rates have hovered around 7% for several months, Khater views the recent decrease positively: “Recent mortgage rate stability is benefitting potential buyers, as purchase demand is stronger than this time last year,” he explained.

Several factors influence mortgage rates, including the yield on the 10-year Treasury note and inflation. Typically, when long-term bond yields decrease, mortgage interest rates follow suit.

Despite rising inflation, which saw consumer prices increase by 3% in January compared to a year ago and core consumer prices rise by 3.3%, mortgage rates still fell. The Federal Reserve's target inflation rate is set at 2%, but current figures remain above this benchmark.

The latest data shows that home prices continue to decline even as market activity picks up. Realtor.com's weekly housing trends update indicated a national median home list price drop of 1.2% from last year’s corresponding period.

Realtor.com senior economic research analyst Hannah Jones noted an increase in inventory: “Buyer activity has not quite kept up with seller activity...but more buyers will likely enter the market as the weather warms and spring nears.”

Homes are currently spending more time on the market due to lagging demand; however, Jones suggested that buyers might soon feel more optimistic about their prospects: “Generally, homebuyers are feeling a bit better about the housing market...perhaps setting the stage for a strong spring.”

Overall projections indicate an increase in home sales throughout 2025 compared to last year's figures.