Today's Mortgage Rates - 05/20/2025

Mortgage Rates Firm A Little

The U.S. and China are talking again, and a postponement in the imposition of the highest of the proposed levies brightened the economic picture, lifting mortgage rates a bit this week.

As reported by Freddie Mac today, the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) increased by five basis points (0.05%), rising to 6.81%. The average rate for the most popular type and term of mortgage has been holding in a narrow range over the last month.

Average offered rates for 15-year fixed-rate mortgages also saw a modest increase, taking back last week's three basis point (0.03%) decline with a three basis point increase this week, returning it to 5.92%. Like its long-term counterpart, rates here remain elevated but stable over the last few weeks.

At present, a 5/1 ARM might offer a homebuyer a lower-cost alternative to a long-term fixed-rate mortgage, although the difference in rate between 30-year FRMs and 5-year hybrid ARMs shrank again this week. The Mortgage Bankers Association said that the initial fixed interest rate on a hybrid 5-year ARM rose by twelve basis points (0.12%) to 6.09%, narrowing the gap in rate compared to a 30-year FRM to sixty-nine basis points (0.69%). On a $300,000 mortgage, a borrower using this ARM would see a $142 lower payment per month and would save just under $11,000 in interest cost over the first five years of the loan.

In a case of "good news is bad news", the reduction in tariffs between the U.S. and China for the next ninety days allows for more comprehensive negotiations to take place, and that's good news. The bad news is that import duties averaging 30% on goods coming in from China is likely to kick inflation higher in the coming months. At the same time, the lowering of tariffs should allow both economies to run with less of a slowdown over the next while than would have been expected just a week ago.

The certainty of higher costs and less of a tempering effect on them from slower growth helped press the yields that influence mortgage rates higher for much of the week. While those effects have not yet been fully reflected in mortgage rates, they will be soon enough.

The Consumer Price Index ticked up by 0.2% overall in April, but this figure is not likely to yet be picking up the imposition of new levies that took place at the beginning of the month. These will likely start to be better reflected in May and June. The modest reading for April helped the overall CPI to slip to a 2.3% annualized rate, its lowest mark in more than four years. Core CPI, a measure that excludes food and energy costs, remained flat at 2.8% over the past year.

Although tailing off a little on Thursday, the yields that most influence mortgage rates are still materially firmer than they were at the start of the week, and that suggests that higher mortgage rates are in the market now and can be expected to remain for at least a few coming 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.