Average mortgage rates increased slightly on Tuesday, May 13, 2025, with the 30-year fixed benchmark nearing 7%. The focus is on the morning’s consumer price index to gauge whether inflation is moving closer to the Federal Reserve’s target of 2% and how Americans are impacted by President Trump’s trade policies. Economists anticipate the new inflation report to show a slight increase from March’s 2.4% reading, cautioning that the full impact of tariff policies may not be evident until later in the year.
For those planning to buy a home in the active spring market, it is advisable to begin looking for a mortgage to determine affordability and secure the lowest approved rate. According to Bankrate’s latest data, the average rate for a 30-year fixed mortgage is 6.88% for purchase and 6.96% for refinancing, up slightly from the previous week. Rates for a 15-year mortgage are at 6.11% for purchase and 6.38% for refinance, also showing a slight increase. The average rate for a 30-year fixed jumbo mortgage is 6.94%.
Mortgage rates are influenced by various factors such as inflation, economic conditions, housing market trends, and the Federal Reserve’s interest rate policies. Lenders also consider individual credit scores, down payment amounts, property details, and loan terms when determining rates.
It is recommended to lock in a mortgage rate when comfortable with the terms and conditions. Additionally, staying informed about market trends and understanding the factors that affect mortgage rates can help in making informed decisions.
Saving money on your mortgage can make a significant difference in your monthly payments and overall costs. However, the mortgage rate you receive is influenced by various factors, such as the type of mortgage you’re considering, the upfront payments you’re prepared to make, and your overall financial health, including your credit score. It’s important to know your credit score as it can help you identify lenders likely to approve your loan and determine the most suitable mortgage for your financial situation. Generally, borrowers with good to excellent credit scores, typically 670 or higher, qualify for the best mortgage rates. Even with fair credit, you may still find competitive rates available.
The amount of your down payment is another crucial aspect that affects your interest rate. Putting down at least 20% of the home’s purchase price can lead to a lower interest rate and eliminate the need for mortgage insurance, reducing your total expenses. Additionally, the loan term you choose impacts your interest rate. Shorter terms usually offer lower interest rates but higher monthly payments, while longer terms result in lower monthly payments but higher overall interest costs.
When selecting a mortgage, you’ll also need to decide between a fixed-rate or adjustable-rate mortgage. Fixed-rate mortgages provide a consistent interest rate throughout the loan term, while adjustable-rate mortgages start with a fixed rate for a set period before adjusting to a variable rate based on market conditions. Your choice between these options depends on your financial objectives and risk tolerance.
Understanding prequalification and preapproval is essential in determining your homebuying capabilities. Prequalification provides a preliminary estimate based on basic information, while preapproval involves a detailed review of your finances to offer a more accurate loan amount. Learning more about these processes can help you navigate the homebuying journey effectively.
Lastly, changes in mortgage rates are influenced by various factors, including the Federal Reserve’s benchmark interest rate. While mortgage rates do not directly mirror the Fed rate, they are affected by similar economic indicators, particularly inflation. Stay informed about current mortgage rate trends to make informed decisions about your home financing.
On May 7, 2025, the Federal Reserve decided to maintain the federal funds target interest rate at 4.25% to 4.50% for the third consecutive time, following three rate cuts in 2024. The Fed emphasized its commitment to achieving maximum employment and controlling inflation at 2%. With stable unemployment rates and solid labor market conditions, the Fed acknowledged increased economic uncertainty. Future rate adjustments will depend on incoming data and the evolving economic outlook.
Looking ahead to the next Federal Reserve policy meeting on June 17–18, 2025, predictions are uncertain. However, market expectations suggest a high likelihood of the Fed keeping rates unchanged. Economists are closely monitoring inflation and labor reports to anticipate future rate cuts. Recent data shows a gradual decrease in inflation rates, accompanied by moderate job growth.
Federal Reserve Chair Jerome Powell reiterated a cautious approach to rate cuts, emphasizing the need to assess evolving data before making any decisions. The Fed remains attentive to economic developments and aims to respond effectively to maintain economic stability.
“The Federal Reserve’s Powell-led rate-setting panel is scheduled to announce its rate decision at the conclusion of the meeting on Wednesday, June 18, 2025, at 2 p.m. ET. Find out more about the upcoming Federal Reserve meetings, how they can impact your finances, and other helpful information on mortgages and homebuying:
– Guide on shopping for a mortgage in 2025
– Overview of popular mortgage loans: Conventional, FHA, VA, and jumbo loans
– Tips on when to refinance your mortgage
– Understanding the impact of a 1% rate change on your mortgage
– Explanation of a mortgage rate lock
– Process of refinancing an ARM into a fixed-rate mortgage
– Answering common questions about mortgage rates
– Explore our personal finance guides for money-saving tips and wealth growth strategies
Learn about mortgage lenders, the difference between lenders and loan servicers, and the benefits of refinancing your mortgage for better terms and rates. Discover if you qualify for homebuyer assistance even if you’ve owned a home before.
Understand adjustable-rate mortgages (ARMs) and how they differ from fixed-rate mortgages, including the process of converting your ARM to a fixed-rate mortgage. Find out about negotiating your mortgage rate and other cost-saving options when comparing lenders, such as mortgage points and upfront fees.”
What happens to my mortgage when I pass away?Your home’s mortgage is handled differently compared to other debts, as it must be settled in full before the property title can be transferred. Generally, mortgages are not transferable, meaning the loan signatories are the ones responsible for repayment. To understand more about the fate of your mortgage after your passing, read on.Can I use my home’s equity to cover unexpected expenses?Yes, you can leverage your home’s equity for various purposes such as home improvements, debt consolidation, or emergencies. This allows you to access funds at lower rates without refinancing your existing mortgage, provided you have a good credit score and sufficient equity built up in your home. Discover how to tap into your home’s equity in a declining rate environment.
