Interest rates for mortgages flirting with Three-week lows
Let's Get Down to Brass Tacks on Mortgage Rates 📈
Mortgage rates have been swaying like a drunken sailor lately, stuck in a tight range for a week. On the not-so-thrifty Thursday, the headline average dropped to 6.88%, y'all! Find out what's happening with other mortgage types below.
Since different lenders offer varying rates, shop around like a boss for the best rates and compare rates regularly, no matter what kind of home loan you're after.
Compare Today's Mortgage Rates - Sippin' Grog on May 5, 2025## Today's Mortgage Rate Averages: Don't Miss Out
After a maddening month of large wild swings, mortgage rates have been bobbing for a week. On Thursday, they shed 2 basis points, sending the 30-year average plummeting to 6.88%. That's about a quarter percent better than three weeks ago, when a five-day surge pushed the average to 7.14% - its highest reading since May 2024.
But back in September, rates took a historic plunge, sinking to a two-year low of 5.89%, about a full percentage point cheaper than today's rates. That might not seem like much, but considering late 2023, when rates catapulted to a historic 23-year peak of 8.01%, the current average is almost 1.15 percentage points lower.
Rates on 15-year mortgages were steady on Thursday, holding at a 5.93% average. That's nearly 40 basis points lower than the April 11 average of 6.31%, the highest reading in close to a year. As with 30-year rates, the 15-year average dropped to its cheapest level in two years last September, sinking to 4.97%. While today's average is up, it's 1.15 percentage points less than October 2023's historic 7.08%, a 23-year high.
Jumbo 30-year mortgage rates dipped 4 basis points on Thursday to register 6.79% on average. That compares to 7.15% about two weeks ago, a 10-month high. In September, jumbo 30-year rates plummeted to 6.24%, the cheapest they've been in 19 months, while October 2023's estimated 8.14% reading might have been the most expensive in over 20 years.
🔔 Weekly Freddie Mac Average:Each Thursday, Freddie Mac, a government-sponsored buyer of mortgage loans, publishes a weekly rate average. This week's reading dropped 5 basis points to 6.76%. In September, the average dropped as far as 6.08%. But back in October 2023, Freddie Mac's average saw a historic surge, skyrocketing to a 23-year peak of 7.79%.
Freddie Mac's average isn't the same as the one we report for 30-year rates. Freddie Mac calculates a weekly average that's a blend of the five previous days of rates. In contrast, our Investopedia 30-year average is a daily reading, offering a more precise and timely indicator of rate movement. Plus, the criteria for included loans—like loan size, credit score, and inclusion of discount points—can vary between Freddie Mac's methodology and ours.
💲 Calculate Your Mortgage Payments:Get a sense of what your monthly mortgage payment could be with our Mortgage Calculator.
Important Info: Don't be Juggling Teaser Rates!
The rates we supply aren't directly comparable to the teaser rates you see online. These rates are cherry-picked to be the most enticing and may be based on factors like paying points in advance or having an ultra-high credit score. The rate you're offered will depend on a variety of factors, like your credit score, income, and more.
What's Making the Rates Go Up and Down?
Mortgage rates are influenced by a host of complex macroeconomic and industry factors, such as the level and direction of the bond market, the Federal Reserve's monetary policy, competition between lenders, and more. Because any number of these can cause fluctuations simultaneously, it's challenging to attribute the change to any one factor.
In 2021, macroeconomic factors kept the mortgage market relatively low. In particular, the Federal Reserve was buying bonds in response to the pandemic's economic pressures. But from November 2021 to March 2022, the Fed started tapering its bond purchases, making significant cuts each month until reaching net zero.
Starting in November 2021, the Fed raised the federal funds rate aggressively to combat inflation. While the fed funds rate doesn't directly affect mortgage rates, its upward pressure has contributed to the recent rise in rates.
But the Federal Reserve: What's It Got to Do with Me?
The Fed's balance sheet management is crucial: When it buys or sells assets like mortgage-backed securities, it can impact rates by altering the supply of these securities in the market.
The Fed's decision to raise the federal funds rate can also influence mortgage rates indirectly by impacting the overall economy and the bond market.
Buckle up! The Fed announced a first rate cut of 0.50 percentage points in September, followed by quarter-point reductions in November and December. However, at their March 19 meeting, the Fed opted to hold rates steady, and they may not make another cut for months.
🔎 How We Track Rates:The national and state averages we cite are provided as-is via the Zillow Mortgage API. They assume a 80% loan-to-value (LTV) ratio (a down payment of at least 20%) and an applicant credit score in the 680-739 range. These rates represent what borrowers can expect when they receive quotes from lenders based on their qualifications, which may vary from advertised teaser rates. © Zillow, Inc., 2025. Use is subject to the Zillow Terms of Use.
Treading through the Mortgage Rate Minefield
Here are some key factors influencing mortgage rates:
- Economic conditions and inflation
- Federal Reserve actions, like its balance sheet management and changes to the federal funds rate
- Government debt and fiscal policies
- Market demand for loans
- External factors like tariffs and trade policies.
Contemporary market conditions, as of May 5, 2025, are shaped by these factors, with ongoing economic uncertainty and inflationary pressures contributing to relatively high rates compared to previous years.
Personal finance enthusiasts should keep an eye on the ico related to mortgage finance, as the ongoing volatility in mortgage rates can significantly impact one's personal-finance goals. The current 30-year mortgage rate average is 6.88%, but shop around and compare rates regularly to secure the best deal.
