Interest Rates for Mortgages Approaching Lowest Point in Three Weeks Period

Interest Rates for Mortgages Approaching Lowest Point in Three Weeks Period

Loosened Leashes: A Surge in Mortgage Rates

Mortgage rates have been unpredictable over the past week, bouncing between high and low points. On Thursday, they took a dip, pushing the flagship averaged rate down to 6.88%. This decrease was not limited to the 30-year new purchase mortgage; various mortgage types also experienced a drop.

Always ensure you're fishing for the best deal by shopping around for your mortgage rates and comparing them regularly. With various home loan options available, it's essential to do your homework to get the most bang for your buck.

Today's Dance of Mortgage Rates - May 5, 2025

After a month of wild swings, 30-year mortgage rates have been treading water for the last week. Thursday's dip of 2 basis points brought the average down to 6.88%. Despite this, the average is still about 0.25 percentage point higher than three weeks ago, when a five-day surge of 44 basis points pushed it to 7.14%.

Last September, a historic plunge saw 30-year rates sink to a two-year low of 5.89%, making today's rates look expensive. However, the current average is a whopping 1.15 percentage points lower than the rates at the end of 2023, when they spiked to a 23-year peak of 8.01%.

Rates on 15-year mortgages remained steady Thursday, holding at a 5.93% average. This is a significant drop from the April 11 average of 6.31%, which was the highest reading in nearly a year. As with 30-year rates, the 15-year average also plummeted to its cheapest level in two years in September, sinking to 4.97%. While today's rate is high, it's still 1.15 percentage points below the historic 7.08% reading in October 2023.

Jumbo 30-year mortgage rates dipped 4 basis points Thursday, sliding to an average of 6.79%. Compared to about two weeks ago, this is a welcomed decrease; the previous reading of 7.15% was a 10-month high. Last fall, jumbo 30-year rates tumbled to 6.24%, their cheapest level in 19 months. However, at an estimated 8.14% peak in October 2023, the average was the most expensive in over 20 years.

Prodding the Poodle: Weekly Freddie Mac Average

Every Thursday, Freddie Mac, a government-sponsored buyer of mortgage loans, calculates a weekly average of 30-year mortgage rates. This week's reading was a dip of 5 basis points, coming in at 6.76%. Last September, the average sunk as low as 6.08%, but in October 2023, it surged to a 23-year peak of 7.79%.

Freddie Mac's average differs from our Investopedia 30-year average because it combines five previous days of rates, creating a weekly average that might not be as up-to-date as our daily reading. Additionally, the criteria for included loans (e.g., down payment, credit score, discount points) vary between Freddie Mac's methodology and ours.

Use our nifty Mortgage Calculator to crunch the numbers for different loan scenarios.

Caveat Emptor: Be Aware of the Fine Print

The rates we publish may not directly compare to the teaser rates you see online, as those rates are carefully selected as the most attractive compared to our averages. Advertised rates often involve paying points in advance or are based on a borrower with an ultra-high credit score or for a smaller-than-typical loan size. The rate you'll ultimately secure will depend on factors like your credit score, income, and more.

The monthly cost of your mortgage will hinge on your home price, down payment, loan term, property taxes, homeowners insurance, and interest rate. So, use the inputs below to get a feel for your potential monthly payment.

Puppet Masters: Things That Move Interest Rates

Mortgage rates are a complex dance that's influenced by a variety of macroeconomic and industry factors. These can include:

• The Level and Direction of the Bond Market, particularly with regard to 10-year Treasury yields
• The Federal Reserve's Monetary Policy, specifically its bond-buying practices and funding of government-backed mortgages
• Competition between mortgage lenders and across loan types

While any of these factors can cause fluctuations, attributing the change to one specific factor is tricky.

Macroeconomic factors kept the mortgage market relatively cheap in 2021, with the Federal Reserve investing heavily in bonds to offset the pandemic's economic pressures.

But in November 2021, the Fed began tapering its bond purchases, leading to significant increases in mortgage rates over the following two years. The rapid and substantial increases in interest rates from the Fed played an indirect role in the rise in mortgage rates, although the direct impact of the federal funds rate on mortgage rates is limited.

Strings Attached: Tracking Mortgage Rates

The national and state averages we cite come from the Zillow Mortgage API, assuming an 80% loan-to-value (LTV) ratio (which means having a down payment of at least 20%) and an applicant credit score in the 680 to 739 range. This results in rates that borrowers can expect to receive based on their qualifications, which may vary from the advertised teaser rates.

[1] "Home Mortgage Disclosure Act Data," Federal Financial Institutions Examination Council. Accessed May 5, 2025.[2] "Federal Reserve Rate Announcements," Federal Reserve. Accessed May 5, 2025.[3] "Mortgage Rates," Investopedia. Accessed May 5, 2025.[4] "Economic Indicators," Federal Reserve Bank of St. Louis. Accessed May 5, 2025.[5] "Understanding Mortgage Loans," Consumer Financial Protection Bureau. Accessed May 5, 2025.

1. The September benchmark saw a historic plunge in 30-year mortgage rates, bringing them down to a two-year low of 5.89%, a significant decrease from the rates in 2023.
2. In contrast, the average mortgage rates in October 2023 reached a 23-year peak of 8.01%, highlighting the variability in the finance sector.
3. Personal-finance enthusiasts must stay vigilant, shopping around for the best mortgage rates and comparing them, given the data-and-cloud-computing driven industry's unpredictability.
4. Technology is not left out of this equation; factors such as the level and direction of the bond market, the Federal Reserve's monetary policy, and competition between mortgage lenders all contribute to the intricate dance that governs mortgage rates.
5. It's essential to be aware of the fine print when considering mortgage rates, as advertised rates may differ from the rates a borrower with specific credit scores and loan sizes might receive.

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