Average mortgage rates for popular terms are continuing to decrease as of Thursday, May 1, 2025, remaining relatively stable compared to the beginning of April. The upcoming jobs report is anticipated to reveal the addition of approximately 133,000 new positions to employer payrolls in April, with the unemployment rate expected to hold steady at 4.2%, as reported by Bloomberg. The market is closely monitoring this data, as weak employment figures and persistent inflation are likely to impact rate trends throughout the spring and summer. A majority of traders, around 95%, predict that the Federal Reserve will maintain the federal funds rate following the upcoming policy meeting next week, according to CME FedWatch. Although the Fed doesn’t set mortgage rates directly, lenders closely track the Fed rate, which reacts to similar economic indicators that influence borrowing rates for significant loans such as mortgages.
For individuals considering entering the housing market, it is advised not to delay in initiating the mortgage shopping process to gauge affordability and secure the most favorable rate possible. The current average rate for a 30-year fixed mortgage stands at 6.79% for purchase and 6.85% for refinance, showing a slight decrease from the previous week. Additionally, rates for a 15-year mortgage average 5.98% for purchase and 6.13% for refinance, representing a decline from the previous week as well. The average rate for a 30-year fixed jumbo mortgage is 6.77%.
Mortgage rates are influenced by various factors such as inflation, economic conditions, housing market trends, and the Federal Reserve’s target interest rate. Lenders also consider individual factors like credit score, down payment size, property type, and loan terms when determining rates. Due to the fluctuating nature of mortgage rates, it’s advisable to secure a rate when comfortable with the prevailing market conditions.
Freddie Mac’s latest weekly Prime Mortgage Market Survey indicates an average rate of 6.81% for a 30-year fixed-rate mortgage, down slightly from the previous week. The fixed rate for a 15-year mortgage is reported at 5.94%, showing a decrease as well compared to the prior week. These rates are lower than the corresponding figures from a year ago. Sam Khater, Freddie Mac’s chief economist, notes that the mortgage rates have displayed relative stability over the past few months, which is positive for prospective borrowers.
Freddie Mac updates its Prime Mortgage Market Survey data weekly on Thursdays at noon ET. There are four key factors that can influence your mortgage rate significantly. Even a mere half percentage point difference in your interest rate can lead to substantial savings over the life of your mortgage. However, the rate you are offered ultimately depends on the type of mortgage you are considering, the upfront payments you are willing to make, and your overall financial health.
Your credit score plays a crucial role in determining the mortgage rates available to you. Borrowers with good to excellent credit scores, typically at least 670 FICO, tend to secure the best rates. Even with fair credit, you may still find mortgage options with reasonable rates.
Making a larger down payment towards your home purchase can benefit your interest rate. Putting down at least 20% of the home’s purchase price often leads to a lower interest rate and allows you to avoid mortgage insurance, ultimately reducing your total costs.
The loan term you choose also impacts your interest rate. While the 30-year mortgage is popular, shorter terms like 20 years, 15 years, and 10 years usually come with lower rates but higher monthly payments. Longer terms may offer lower monthly payments but result in paying more interest over the loan term.
When deciding on a mortgage, consider the type of interest rate that suits your financial goals. Fixed-rate mortgages maintain a consistent interest rate throughout the loan term, while adjustable-rate mortgages (ARMs) start with a fixed rate that later adjusts based on market conditions. Your choice between the two depends on your financial objectives and risk tolerance.
Understanding the difference between prequalification and preapproval is essential in the homebuying process. Prequalification provides a basic estimate of your borrowing capacity, while preapproval involves a thorough assessment of your finances to determine the amount a lender is willing to lend you.
Mortgage rates are influenced by various factors, including the benchmark federal funds target interest rate set by the Federal Reserve. While mortgage rates do not directly follow the Fed rate, they are affected by similar economic factors, particularly inflation. As the Fed rate rises, mortgage rates tend to increase as well.
After spending decades recovering from the pandemic, the Federal Reserve made a much-anticipated move by cutting its federal funds target interest rate by half a point on September 18. This was followed by two additional quarter-point cuts in November and December of the same year.
As of March 19, 2025, the Fed announced a pause on rate cuts for the second time. During its policy meeting, the Fed decided to keep the federal funds target interest rate steady within the range of 4.25% to 4.50%. This marked the second instance of the Fed halting rate changes since the series of cuts made in September, November, and December, totaling a full percentage point reduction in an effort to bring the inflation rate closer to the desired 2%.
In its post-meeting statement, the Federal Reserve mentioned that it was maintaining the target range to achieve “maximum employment” and control inflation at 2%. The Fed acknowledged the stability of the low unemployment rate and solid labor market conditions, while also noting increased uncertainty in the economic outlook.
Looking ahead to the next policy meeting scheduled for May 6–7, 2025, the Federal Reserve is expected to keep the Fed rate unchanged at 4.25% to 4.50%. Market expectations suggest a high likelihood of rates remaining as they are, with a 95% chance predicted by the CME FedWatch Tool.
Economists are closely monitoring inflation and labor reports to gauge the timing of potential future cuts to the Fed rate. Recent data shows a downward trend in inflation rates, with the consumer price index easing to 2.4% in March. Job data indicated a strong increase in payrolls for March, surpassing projections and contributing to a rise in the unemployment rate to 4.2%.
Federal Reserve Chair Jerome Powell addressed concerns about the impact of President Trump’s tariffs on future policy decisions during a speech in Chicago on April 16, emphasizing the challenges posed by ongoing trade developments.
The Federal Reserve, led by Chairman Powell, will reveal its rate decision after the meeting on Wednesday, May 7, 2025, at 2 p.m. ET. Stay informed about the upcoming Federal Reserve meetings and how they impact your finances. Explore our series on mortgages and homebuying to gain valuable insights and tips:
– A comprehensive guide on shopping for a mortgage in 2025
– Overview of popular mortgage loans: Conventional, FHA, VA, and jumbo loans
– Knowing when to refinance your mortgage
– Understanding the impact of a 1% rate change on your mortgage
– Explanation of a mortgage rate lock
– Transitioning from an ARM to a fixed-rate mortgage
– Frequently asked questions about mortgage rates
Discover more about mortgages to make informed decisions that align with your budget and financial goals. Additionally, explore our wide range of personal finance guides designed to help you save money, increase earnings, and build wealth.
Learn about mortgage lenders: the institutions that provide funds to homebuyers. Distinguish between lenders and loan servicers, and understand their respective roles in your loan process.
Refinancing your mortgage involves switching from your current lender to a new one for better rates and terms. Find out how this process works in our guide to refinancing timing.
If you’ve owned a home before, you may still qualify for homebuyer assistance programs. Explore available options, regardless of your past homeownership status, in our guide to homebuyer assistance.
An adjustable-rate mortgage (ARM) features a variable interest rate, unlike a fixed-rate mortgage. Understand how ARMs work and the adjustments they undergo over the loan term. Discover how to convert your ARM into a fixed-rate mortgage in our refinancing guide.
While negotiating your mortgage rate may not be common, you can inquire about cost-saving strategies from lenders. Consider options like mortgage points, upfront fees that can lower your interest rate, to potentially reduce expenses when selecting a mortgage lender.
Discover how to secure the best rate for your mortgage by understanding your lender and loan. Learn more about what happens to your mortgage after you pass away and how your home’s mortgage differs from other debts. Find out if you can leverage your home’s equity to cover unexpected costs and high-dollar expenses without refinancing. Explore ways to access lower rates and unlock the equity in your home. Stay informed with current rates and market insights as of Thursday, May 1, 2025. Sources include Bankrate, Freddie Mac, U.S. Bureau of Labor and Statistics, and CME Group.
