Will Mortgage Rates Go Down In May?

irina88w/GettyImages; Illustration by Hunter Newton/Bankrate

Inflation keeps hanging around, and the Federal Reserve has yet to lower its benchmark rate any further, factors that mean mortgage rates aren’t likely to move much this month. However, a slowing economy and new post-election uncertainty might push mortgage rates down a bit in May, mortgage insiders say.

“Mortgage rates are likely to fall if signs of economic weakness start showing up in data and not just sentiment surveys,” says Greg McBride, Bankrate’s chief financial analyst. “But any pullback will be limited if we see more inflation pressures.”

Mortgage rates are likely to fall if signs of economic weakness start showing up in data and not just sentiment surveys, but any pullback will be limited if we see more inflation pressures.

— Greg McBride, CFA, chief financial analyst for Bankrate

For months, mortgage rates have been held aloft by the combination of a still-strong economy, inflation fears and growing concerns about a rising federal deficit.

So much for hopes that mortgage rates were headed back into the 5 percent range. The average 30-year mortgage rate began declining from 7 percent last summer, fell to as low as 6.2 percent in September, then quickly reversed course, tracking back above 7 percent by the end of 2024, according to Bankrate’s weekly lender survey. However, as of April 30, rates stood at 6.81 percent.

The Federal Reserve doesn’t directly set mortgage prices, but the central bank does influence them. The Fed cut its benchmark rate three times last year, but it held steady at its January meeting. The Fed next meets in early May.

Learn more: How the Fed affects mortgage rates

Will mortgage interest rates go down again?

The possibility of sub-6 percent mortgage has grown fainter. Fannie Mae predicts rates will edge down to 6.2 percent by the end of the year, while the Mortgage Bankers Association expects 30-year rates will barely decrease, to 6.7 percent by the end of 2025.

“While factors like inflation and tariffs could introduce volatility, the current trajectory suggests that mortgage rates are on a downward path in the near term,” says Anthony Kellum of Kellum Mortgage.

Learn more: Housing market trends to watch in 2025

Current mortgage rate trends

Higher mortgage rates have kept homeowners clinging to lower-cost loans, a trend known as the “lock-in effect.” Meanwhile, the median national home price clocked in at $403,700 in March, according to the National Association of Realtors.

Bankrate’s weekly mortgage rate averages differ slightly from the statistics reported by Freddie Mac, the government-sponsored enterprise that buys mortgages and packages them as securities. Bankrate’s rates tend to be higher because they include origination points and other costs, while Freddie Mac removes those figures and reports them separately. However, both Bankrate and Freddie Mac report similar overall trends in mortgage rates.

What to do if you’re getting a mortgage this year

Improve your credit score. A lower credit score won’t prevent you from getting a loan, but it can make all the difference between getting the lowest possible rate and more costly borrowing terms. The best mortgage rates go to borrowers with the highest credit scores, usually at least 780.
Save up for a down payment. Putting more money down upfront can help you obtain a lower mortgage rate, and if you have 20 percent, you’ll avoid mortgage insurance, which adds costs to your loan. If you’re a first-time homebuyer and can’t cover a 20 percent down payment, there are loans, grants and programs that can help. The eligibility requirements vary by program, but are often based on factors like your income.
Understand your debt-to-income ratio. Your debt-to-income (DTI) ratio compares how much money you owe to how much money you make, specifically your total monthly debt payments against your gross monthly income. Not sure how to figure out your DTI ratio? Bankrate has a calculator for that.

FAQ

Mortgage rates are not directly set by any one entity. Instead, mortgage rates grow from a complicated mix of economic factors. Lenders typically set their rates based on the return they need to make a profit after accounting for risks and costs. The Federal Reserve gets a lot of attention, but it doesn’t directly set mortgage rates. The closest proxy for mortgage rates is the 10-year Treasury yield. Historically, the typical 30-year mortgage rate was about 2 percentage points higher than the 10-year Treasury yield. That “spread” has been closer to 3 percentage points since the pandemic.
Deciding when to refinance is based on many factors. If rates have fallen since you took out your mortgage, refinancing might make sense. A refi can also be a good idea if you’ve improved your credit score and could lock in a lower rate. A cash-out refinance can accomplish that as well, plus give you the funds to pay for a home renovation or other expenses.