Today's Mortgage Rates - 05/11/2025

Fed, Mortgage Rates Steady

Last week's modest bond market rally gave way to this week's modest selloff, and mortgage rates remained essentially unchanged.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) remained unchanged this week, holding at 6.76%. While we expected to see a decline this week, it did not come to pass.

Average offered rates for 15-year fixed-rate mortgages did manage a small decline, though, easing by three basis points (0.03%) to land at 5.89%. This is the lowest average rate in a months' time.

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 narrowed this week again. The Mortgage Bankers Association said that the initial fixed interest rate on a hybrid 5-year ARM rose by eight basis points (0.08%) to 5.97%, expanding the gap in rate compared to a 30-year FRM to seventy-nine basis points (0.79%). On a $300,000 mortgage, a borrower using this ARM would see a $156 lower payment per month and would save nearly $10,000 in interest cost over the first five years of the loan.

A solid employment report for April last Friday helped lift the bond yields that most influence mortgage rates, and they were elevated further by a more-solid than expected report from the Institute for Supply Management that suggested a firming of service-business activity last month, too. Combined, these erased the opportunity for the decline in mortgage rates we expected.

The Federal Reserve held a meeting this week, and Fed Chair Powell expressed a mix of optimism and concern at his post-conference press conference. He noted that the so-called "hard" data have remained solid -- things like labor market conditions, consumer spending and income growth. While the initial reading of first-quarter GDP was negative, Mr. Powell attributed it to the surge of imports during the period, but noted that a less "noisy" measure the Fed follows -- PDFP, or "private domestic final purchases" -- was solid for the period and little changed from last year's pace.

However, there remains great uncertainty as to what the effects of trade and tariff changes will be on both growth and inflation. In his prepared remarks, Mr. Powell said "The risks of higher unemployment and higher inflation appear to have risen, and we believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments." As such, the Fed remains in wait-and-see mode, and there is little expectation that the Fed will be cutting rates anytime very soon.

At present, the yields that most influence mortgage rates are firming again, so expect to see somewhat higher rate for 30-year fixed-rate mortgages in the markets in the 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.