Prospective homebuyers are seeing a slight reprieve as mortgage interest rates dip, with the average rate for a 30-year fixed mortgage currently standing at 6.84%. This marks a decline of 0.09% from the previous week. Meanwhile, the average rate for a 15-year fixed mortgage has also decreased to 6.03%, down 0.07% from the prior week.
The past few months have been tumultuous for mortgage rates, influenced by persistent inflation, concerns over a global trade war, and escalating recession fears. As a result, affordable options for homebuyers have become scarce. The Federal Reserve is taking a cautious approach regarding interest rate changes, opting to maintain the current rates after three reductions last year. This trend continued at their latest meeting on May 7, marking the third consecutive gathering in which rates remained steady.
Logan Mohtashami, a senior analyst at HousingWire, indicates that if President Trump relaxes some of his aggressive tariff policies or if the job market weakens, the Fed may respond by lowering interest rates again. Such a move could help bring down bond yields and, therefore, mortgage rates. For now, average 30-year fixed rates are predicted to fluctuate between 6.5% and 7%.
Homebuyers continue to grapple with high property prices and limited inventory, making it essential to act swiftly when rates begin to decline. Experts suggest that prospective buyers shop around and compare offers to secure the best deal. Those interested can enter their information to receive personalized quotes from CNET’s partner lenders.
Mortgage rates closely track the bond market, particularly the 10-year Treasury yield, which responds to shifts in investor forecasts related to inflation, labor market data, monetary policy, and global economic factors like tariffs. While initial forecasts anticipated a gradual decline in mortgage rates—which could potentially reach 6% by the end of 2025—concerns about a looming recession and unstable trade policies have kept long-term bond yields and mortgage rates in a state of flux.
Melissa Cohn, regional vice president at William Raveis Mortgage, explains, “Bond yields will only drop if the rate of inflation continues to drop and the economy weakens. If inflation were to fire back up, that could cause rates to go up,” referencing the inflationary nature of tariffs.
Even if the economy weakens and the Federal Reserve resumes interest rate cuts in the summer, it may be challenging for mortgage rates to dip below 5.5% without risking a recession characterized by job losses.
For those contemplating mortgage options, understanding loan terms is crucial. The most common mortgage terms are 15 and 30 years, though 10-, 20-, and 40-year options are also available. Fixed-rate mortgages, where interest rates remain constant for the life of the loan, provide stability, while adjustable-rate mortgages typically feature a fixed rate for a limited period (usually five, seven, or ten years) before adjusting annually based on market conditions. Fixed-rate mortgages are generally preferable for long-term homeowners, while adjustable-rate mortgages may offer lower initial rates.
Presently, the average rate for a 30-year fixed mortgage is 6.84%, which tends to come with a higher interest rate than that of a 15-year fixed mortgage but offers lower monthly payments. Conversely, the average rate for a 15-year fixed mortgage now stands at 6.03%. While the monthly payments are higher for this option, borrowers pay less interest overall and can eliminate their mortgage debt sooner.
Those considering a 5/1 adjustable-rate mortgage (ARM) can expect an average rate of 6.23% at present. The introductory rate for a 5/1 ARM is lower during the initial five years, making it an attractive option for those who may plan to sell or refinance within that timeframe.
Calculating your monthly mortgage payment should align with your financial objectives and personal budget. CNET’s mortgage calculator can assist potential buyers in estimating their future monthly obligations.
While mortgage rates remain elevated along with home prices, the housing market will not always be unaffordable. It’s advisable to save for a down payment and work on improving your credit score, positioning yourself for a competitive mortgage rate when opportunities arise.