Today's Mortgage Rates - 05/05/2025

Mortgage Rates Manage Small Slip

With economic concerns rising, mortgage rates declined a little this week.

As reported by Freddie Mac today, the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) declined by five basis points (0.05%), sliding down to 6.76% Per last week's MarketTrends newsletter, we expected to see a slight decline in rates this week.

Average offered rates for 15-year fixed-rate mortgages dropped back by a bit less, posting just a two basis point (0.02%) fall compared to last week. This left the average offered rate for the most popular shorter-term mortgage at 5.92%, still holding the middle of a recent range.

At present, a 5/1 ARM might offer a homebuyer a lower-cost alternative to a long-term fixed-rate mortgage, and the difference in rate between 30-year FRMs and 5-year hybrid ARMs widened a little this week again. The Mortgage Bankers Association said that the initial fixed interest rate on a hybrid 5-year ARM fell by twelve basis points (0.12%) to 5.89%, expanding the gap in rate compared to a 30-year FRM to eighty-seven points (0.87%). On a $300,000 mortgage, a borrower using this ARM would see a $170 lower payment per month and would save nearly $13,000 in interest cost over the first five years of the loan.

While advance indicators suggested that it should have been expected, it was still a bit of a surprise to many this week when the initial GDP report for the first quarter had a negative sign in front of it. To be sure, the 0.28% contraction in economic growth was barely sub-par, but it was a noticeable downshift from the solid 2.45% expansion at the end of last year.

The vast majority of the decline came from a surge in imports, which subtract from growth in the GDP calculation. This distortion was due to businesses and consumers advance ordering goods from overseas before tariffs increased costs. Another drag on growth was diminished government spending during the period. That said, overall consumption did slow to a more modest pace during the period. It's worth noting that these impacts occurred before the tariff announcement at the beginning of April, and effects from the actual imposition of tariffs won't start to be reflected in GDP calculations until the second quarter has closed and all is tallied. That won't happen until late July.

In the meanwhile, concerns about the economy are moving into the forefront again, as are worries about how much final prices will be impacted by new levies. We'll know more as we go along, but the Federal Reserve meets again next week to ponder all this and consider how to adapt monetary policy to fit the changing landscape.

The April employment situation report on Friday may move markets, but supporting labor market metrics suggest that only some slowing in hiring is most likely to have occurred. If this comes to pass, we'd expect to see flat to slightly lower mortgage rates in the market in the coming few days.

Each week in HSH's MarketTrends newsletter, we track and discuss economic conditions that affect mortgage rates and their impact on housing markets and consumers. Read the most recent edition of MarketTrends or subscribe for email delivery.