Today’s Mortgage Rates – May 1, 2025: Rates Fluctuate After Negative GDP Data

Today's mortgage rates, as of May 1, 2025, are experiencing fluctuations due to recent economic data, particularly concerning GDP and inflation. The 30-year fixed mortgage rate has seen a slight increase to 6.64%, while the 15-year fixed rate remains steady at 5.91%. Conversely, the 5/1 ARM rate has dropped to 6.72%. This volatility is primarily attributed to negative GDP growth and higher-than-expected inflation, creating uncertainty around future Federal Reserve actions.

Today's Mortgage Rates – May 1, 2025: Fluctuating Amid Economic Uncertainty

Key Takeaways

Current Rates	Interest Rate (%)
30-year Fixed Rate	6.64
15-year Fixed Rate	5.91
5/1 ARM Rate	6.72
Opportunity for Refinance	Current rates may provide savings opportunities
Economic Indicators	GDP contraction & rising inflation influencing decisions

Understanding Mortgage Rates

A mortgage interest rate is essentially the cost of borrowing money from a lender, expressed as a percentage. Understanding the different types of mortgages available helps borrowers make informed decisions when purchasing or refinancing a home.

• Fixed-Rate Mortgages: These lock in your rate for the entirety of the loan term. For instance, if you take out a 30-year mortgage at a fixed rate of 6%, that rate will not change over the full 30-year period, barring any refinance or sale of the home.
• Adjustable-Rate Mortgages (ARMs): In contrast, ARMs offer a fixed rate for an initial period before adjusting at pre-determined intervals. For instance, a 5/1 ARM might have a fixed rate for the first five years, after which rates can adjust annually based on market conditions.

Today's mortgage rates as per Zillow's data can be summarized in the table below:

Mortgage Type	Interest Rate (%)
30-year Fixed	6.64
20-year Fixed	6.30
15-year Fixed	5.91
5/1 ARM	6.72
7/1 ARM	7.07
30-year VA	6.19
15-year VA	5.63
5/1 VA	6.22

Today's Refinance Rates

For those considering refinancing their current mortgage, it’s equally important to be aware of current refinance rates. Refinancing a loan can often yield savings if interest rates have dropped significantly since obtaining the original mortgage.

Refinance Type	Interest Rate (%)
30-year Fixed	6.68
20-year Fixed	6.44
15-year Fixed	5.98
5/1 ARM	6.94
7/1 ARM	7.48
30-year VA	6.29
15-year VA	6.01
5/1 VA	5.99

What’s Causing the Fluctuations?

The fluctuations in mortgage rates are significantly affected by macroeconomic indicators such as GDP and inflation. Recently, it was reported that the U.S. gross domestic product (GDP) fell by 0.3% in the first quarter of 2025. This contraction marked the first decline in three years, indicating potential economic weakness.

Economic Data Impact:

Economic Indicator	Current Status	Implication
GDP Growth (Q1 2025)	-0.3%	Indicates economic contraction
Inflation Rate	Higher than expected	May pressure Fed to change monetary policy
Job Growth (April)	62,000 new jobs added	Below expectations, signals economic slowdown

In tandem, rising inflation is creating a challenging environment. Bad economic news typically results in lower mortgage rates as investors shift their focus to safer investments like bonds, which can lead to increased demand for mortgage-backed securities. However, the uncertainty regarding tariffs and their potential inflationary effects could lead to upward pressure on rates soon.

Future Predictions for Mortgage Rates

Looking ahead, experts remain cautious. Most forecasts suggest that mortgage rates may gently decline throughout 2025, but this is contingent upon economic stability. Should tariffs trigger further economic downturns, rates could potentially drop more sharply. Conversely, if inflation remains stubbornly high, mortgage rates may edge upwards.

2025 Forecast Overview:

Forecast Provider	Expected Mortgage Rate (2025)	Key Considerations
National Association of REALTORS®	6.4%	Gradual decline anticipated
Fannie Mae	6.2%	Economic conditions will dictate changes
Freddie Mac	May remain higher due to economic conditions	Potential stabilization depending on inflation

According to projections from the National Association of REALTORS®, mortgage rates are anticipated to average around 6.4% by the end of 2025, which is a slight decrease from recent trends. Similarly, Fannie Mae expects to conclude the year with rates around 6.2%, indicating an overall expectation of gradual rate reductions.

The Impact of Federal Reserve Actions

Changes in the federal funds rate have historically influenced mortgage rates, albeit indirectly. The Federal Reserve's adjustments can affect investor behavior and, consequently, the demand for mortgage-backed securities. As of now, the Fed has signaled a cautious approach, opting to monitor economic conditions before making any significant cuts to interest rates. Their dual mandate of fostering maximum employment while keeping inflation in check complicates decisions during such unpredictable economic circumstances.

The following summarizes the Federal Reserve’s actions and their implications:

Fed Action	Description	Potential Outcome
Rate Increases (2022-2023)	Dramatic increases to control inflation	Slower economic growth, potential recession
Current Stance (2025)	Wait and see approach to monitor economic indicators	Uncertain mortgage rate movements

When mortgages are taken out, even a small shift in the interest rate can have significant financial implications over time. As a general guideline, a typical benchmark for considering refinancing is a drop in the interest rate of at least 1%. However, individual circumstances can vary widely, and potential borrowers should always consider their own financial landscape when evaluating refinancing options.

Comparing Common Mortgage Types

While the 30-year fixed mortgage is popular for its low monthly payments, the 15-year fixed mortgage often provides a lower interest rate and allows for quicker debt repayment. Each option has distinct benefits:

Mortgage Type	Pros	Cons
30-Year Fixed	Low monthly payments, accessible for budgets	More interest paid over time
15-Year Fixed	Less interest, quicker debt repayment	Higher monthly payments can strain budgets

Ultimately, the choice between these options hinges on personal financial situations and long-term homeownership goals.

Summary:

As we navigate the current economic climate, it is vital to keep an eye on shifts in mortgage and refinance rates. The interplay between economic indicators like inflation and GDP growth will play a crucial role in determining mortgage rates in the months ahead. Whether you're looking to purchase a new home or refinance an existing one, understanding the landscape of today's mortgage rates is essential for making informed financial decisions.