Mortgage rates remained unchanged this week, holding at 6.76% amid the Federal Reserve’s decision to keep its policy rate steady—offering homebuyers a brief window of predictability. The average rate for a 30-year fixed mortgage stayed at 6.76% for the week ending May 8, 2025, according to Freddie Mac. This marks the third straight week of relative stability following modest declines. A year ago, the rate stood higher at 7.09%.
“Mortgage rates stayed flat this week,” said Sam Khater, chief economist at Freddie Mac. “At this time last year, the 30-year fixed-rate mortgage was 30 basis points higher and purchase applications were declining. Today, rates are lower and have remained stable for weeks, sparking continued increases in purchase applications.”
What’s behind today’s mortgage rate stability?
The Federal Reserve’s decision to maintain its benchmark interest rate at 4.25% to 4.5% was a key factor behind this week’s rate stagnation. The central bank, responding to a mixed economic outlook, opted for a wait-and-see approach during its May meeting.
- Fed’s rate decision: No change to policy rate
- 10-year Treasury yield: Slight dip following Fed announcement
- Economic outlook: Rising concerns over inflation and unemployment
Realtor.com® economist Jiayi Xu noted that mortgage rates are likely to hover in the high-6% range in the near term—unless major shifts occur, such as outcomes from upcoming U.S.-China trade talks.
How mortgage rates are calculated
Mortgage rates are primarily tied to the yield on 10-year Treasury bonds, which respond to broader economic indicators such as inflation, GDP growth, and investor sentiment.
Here’s how lenders set your rate:
| Factor | Impact on Rate |
|---|---|
| 10-Year Treasury Yield | Serves as the benchmark rate |
| Lender’s Margin | Covers costs and desired profit |
| Credit Score | Higher score = Lower rate |
| Loan Type & Term | FHA, conventional, 15 vs. 30-year terms |
| Down Payment Size | Larger down payment = Less risk to lender |
Credit score matters more than ever
A borrower’s credit score remains a critical factor in determining the mortgage rate they’re offered. Here’s a general breakdown:
- 620+ – Standard minimum for conventional loans
- 500–619 – May qualify for FHA loans, though with higher rates
- 740+ – Typically receives the lowest available rates
Lenders also consider debt-to-income ratio, employment history, and total assets before finalizing a mortgage offer.
Housing demand and applications see mixed trends
While overall mortgage applications dipped 2% for the week ending March 21, purchase applications rose 1% week-over-week and 7% year-over-year, according to the Mortgage Bankers Association (MBA).
“The increase in purchase applications is driven by FHA loans, as buyers seek affordability in today’s tight market,” said Joel Kan, MBA’s deputy chief economist.
Still, high home prices and cost-of-living pressures continue to challenge many potential buyers. With economic uncertainty—including job security concerns and the evolving impact of trade policies—some are opting to delay major purchases.
What this means for homebuyers
If you’re house hunting, this period of rate stability might offer a chance to act before any future economic changes trigger volatility.
Key takeaways:
- Rates remain lower than this time last year
- Stable conditions give buyers more negotiating time
- Economic uncertainty still looms
While mortgage rates haven’t fallen significantly, their steadiness may benefit buyers prepared to act now—especially those with strong credit and sizable down payments.
What happens next?
The housing market continues to balance between affordability challenges and cautious optimism. Barring major policy shifts or economic disruptions, rates are expected to stay near current levels short-term. Homebuyers should monitor Treasury yields, economic indicators, and Fed signals for signs of change.
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