Today’s Mortgage Rates – May 2, 2025: Rates Are Down 46 Basis Points From Last Year

As of May 2, 2025, mortgage rates have experienced a slight drop overall compared to previous weeks. The national average 30-year fixed mortgage rate is now 6.76%, reflecting a decrease of five basis points this week. This marks a significant drop of 46 basis points from the same time last year. For those considering refinancing, the 30-year refinance rate currently stands at 6.64%. This general decline provides a more favorable landscape for homebuyers and homeowners looking to refinance than a year prior.

Today's Mortgage Rates – May 2, 2025: Rates Are Down 46 Basis Points From Last Year

Key Takeaways

• Current 30-year fixed mortgage rate: 6.76% – down 5 basis points from last week.
• 15-year fixed mortgage rate: 5.92% – down 2 basis points.
• Rates have decreased significantly over the past year, with the 30-year rate down 46 basis points and the 15-year rate down 55 basis points.
• Factors like tariffs and economic conditions could influence future rate trends.
• Refinance rates for a 30-year fixed mortgage stand at 6.64%.

Understanding Today's Mortgage Rates

Mortgage rates are crucial for anyone looking to buy a home or refinance an existing loan. These rates fluctuate based on numerous factors, including government monetary policies, economic indicators, and the demand for housing. Understanding these variables can help you gauge the best time to make a purchase or consider refinancing.

Current Mortgage Rates

Here's a concise overview of today's mortgage rates sourced from Zillow:

Mortgage Type	Current Rate	Change
30-year Fixed	6.76%	-5 basis points
15-year Fixed	5.92%	-2 basis points
20-year Fixed	6.30%	N/A
5/1 ARM	6.73%	N/A
7/1 ARM	7.03%	N/A
30-year VA	6.16%	N/A
15-year VA	5.57%	N/A
5/1 VA	6.26%	N/A

It’s noteworthy that the 30-year fixed mortgage rates reflect more than just a momentary decrease. In fact, they show a downward trend compared to last year, where rates were significantly higher. This situation gives potential buyers a more advantageous position than they experienced in the past.

Refinancing Opportunities

Refinancing can be an excellent strategy for homeowners looking to leverage lower mortgage rates for better terms. Here are the current refinance rates from Zillow:

Refinance Type	Current Rate	Change
30-year Fixed	6.64%	N/A
15-year Fixed	6.01%	N/A
20-year Fixed	6.31%	N/A
5/1 ARM	6.97%	N/A
7/1 ARM	7.42%	N/A
30-year VA	6.23%	N/A
15-year VA	5.91%	N/A
5/1 VA	6.20%	N/A

The differences between standard mortgage rates and refinancing rates can sometimes be subtle, but they are typically influenced by other economic factors, including market liquidity and interest rate environment.

How Mortgage Interest Rates Work

The mortgage interest rate represents the cost of borrowing money for your home. Rates can either be fixed or adjustable, each having distinct impacts on your payments over time.

• Fixed Mortgage Rates: A fixed-rate mortgage keeps the interest rate the same over the life of the loan, providing stability. For example, if you secure a 30-year mortgage at 6%, that is your rate for the entire period, providing predictability for budgeting.
• Adjustable-Rate Mortgages (ARMs): These begin with a lower introductory rate for a specified period (like 5/1 ARM which has a fixed rate for the first five years), after which the rate fluctuates based on market conditions. This type of mortgage could lower initial payments but may result in higher payments as rates adjust.

Example Calculations

Let’s break down how to think about these rates in practical terms:

Imagine you obtain a 30-year fixed mortgage of $300,000 at an interest rate of 6.76%. Your monthly payment would be approximately $1,959. Conversely, if you opted for a 15-year fixed mortgage of the same amount at 5.92%, your monthly payment would rise to $2,563, but you would significantly reduce the total interest paid over the life of the loan.

To provide a clearer comparison, let’s consider how much interest you would pay over the life of each loan:

• 30-Year Fixed Mortgage: Total interest paid would be approximately $239,802.
• 15-Year Fixed Mortgage: Total interest paid would be about $59,280.

As you can see, while the monthly payment on the 15-year option is higher, the total amount you pay in interest is significantly reduced.

The Bigger Picture: Economic Influences on Mortgage Rates

Inflation and Interest Rates

Inflation plays a substantial role in determining mortgage rates. As inflation rises, the Federal Reserve may increase interest rates to help control it. This tightening of monetary policy often leads to higher mortgage rates. In recent times, inflation has been more persistent than expected, causing the Fed to rethink its approach to rate adjustments.

Employment and Economic Growth

Employment rates are another crucial factor. An economy with low unemployment typically sees increased consumer spending, leading to higher home demand. When demand for homes rises, mortgage rates often follow. Conversely, if unemployment increases and economic growth slows, you might see mortgage rates decrease as lenders become more competitive to attract borrowers.

The Impact of Tariffs and Trade Policies

Recent government policies, particularly regarding tariffs, have added another layer of complexity to the mortgage rate landscape. For instance, after pausing some tariffs for 90 days, there are ongoing negotiations for new trade deals. These developments could lead to economic adjustments that ultimately affect mortgage rates. How tariffs impact costs can shift inflation expectations, which in turn influences interest rates.

Understanding the Role of Credit Scores

When borrowing or applying for a mortgage, your credit score is crucial. Lenders use credit scores to gauge your likelihood to repay loans. A higher credit score generally qualifies you for lower interest rates. In today's environment, where rates are slightly decreasing, improving your credit score could allow for even better deals. Here’s how the score ranges often break down:

Credit Score Range	Typical Interest Rate Increase
740 and above	Baseline rate
720 – 739	+0.25%
700 – 719	+0.50%
680 – 699	+0.75%
Below 680	+1% or more

Understanding this can assist potential homebuyers in managing their credit before applying for a mortgage.

Lender Competition Impacting Rates

With the current market environment, a high number of competing lenders can lead to more favorable rates for borrowers. Mortgage lenders will often adjust their offers based on the competition in the market. During periods of high competition, rates may decrease as lenders attempt to attract more customers. Keeping an eye on different mortgage lenders and their offers can potentially save significant amounts over the life of the loan.

Future Mortgage Rate Predictions

Experts are predicting that mortgage rates will remain in a relatively competitive range throughout the remainder of 2025. The general consensus among industry analysts is that rates may drop slightly as the economy stabilizes and inflation continues to cool. However, uncertainties surrounding tariffs and their impacts complicate predictions.

According to Fannie Mae, mortgage rates are expected to stabilize, with optimistic forecasts suggesting they might end 2025 at 6.2%, while the National Association of REALTORS® projects a similar trend. As the year progresses and economic data unfolds, these rates may be subject to fluctuations based on responses from the Federal Reserve.

Conclusion

In summary, while today's mortgage rates show a slight decline from previous weeks, they are still relatively high compared to historic lows seen in prior years. The financial landscape is influenced by a combination of economic conditions, government policies, and borrower choices. For prospective homebuyers and those looking to refinance, this drop presents an opportunity, but remaining informed and vigilant is key.