What could happen to mortgage rates this May?
Some changes could be coming for mortgage rates this May, experts say.
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Mortgage rates remain higher than many homebuyers prefer right now as inflation persists and the Federal Reserve maintains elevated benchmark rates. And with May approaching, bringing both market changes and another scheduled Fed meeting, uncertainty looms.
So what could happen to mortgage interest rates this upcoming month? We consulted mortgage lending experts to break down three possible scenarios for May's mortgage rates. Below, they explain what might push rates up, down or keep them steady — and what that means for your homebuying decisions.
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What could happen to mortgage rates this May?
"I'm predicting mortgage rates will go slightly lower in May 2025, likely settling between 6.4% and 6.6% for a 30-year fixed," says Steven Glick, a licensed mortgage loan officer and director of mortgage sales at HomeAbroad, a real estate investment fintech company.
Other mortgage experts echo similar sentiments about limited movement ahead. For example, Karen Mayfield, national head of originations at Multiply Mortgage, a mortgage-as-a-benefit provider, expects daily volatility — but within a 0.25% to 0.375% range in movement overall for the next few months.
But mortgage forecasts are just educated guesses based on trends we're seeing. Let's examine what could drive rates in each possible direction next month:
Why mortgage rates could drop in May
"For rates to dip, we'd need a clear sign the economy's cooling off," explains Glick. "If inflation falls closer to the Fed's 2% target [and] the Consumer Price Index drops to 2.5% or lower in April's report, that could spark talk of a Fed rate cut." When Treasury yields drop in response to cooling inflation, mortgage rates often follow.
Consumer behavior already suggests this cooling may be underway. "The consumer has lost some confidence in the market," notes Dean Rathbun, executive vice president at United American Mortgage Corporation. He's seeing reduced spending on goods and services. This could signal to markets that economic growth is stalling, potentially leading to lower interest rates.
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Why mortgage rates could stay the same in May
"Rates could hold steady if the economy keeps humming along without big shocks," says Glick. "If inflation stays around 2.8% to 3%, and job growth continues at a moderate pace, the Fed's likely to keep their hands off the benchmark rate at the May meeting."
This scenario would keep Treasury yields near 4.3%, resulting in mortgage rates remaining in the mid-6% range.
Why mortgage rates could rise in May
"Rates could climb if the economy heats up," warns Glick. "If inflation jumps past 3%, yields could hit 4.5%." A stronger-than-expected jobs report would likely cause lenders to increase rates, with Treasury yields rising in response to signs of economic strength.
Market uncertainty creates another path to higher rates.
"The mortgage markets like security and certainty, neither of which they are seeing right now," explains Rathbun. "Therefore, rates increase to offset the potential risk that bonds incur."
Mayfield adds that international factors could drive mortgage rates up.
"China is a major holder of U.S. Treasuries and mortgage-backed securities," she says. "If they retaliate by selling these assets, we could see a spike in mortgage rates."
Smart strategies for navigating uncertain rate environments
With May's mortgage rate direction unclear, practical strategies are more helpful than perfect predictions. Mortgage professionals recommend the following:
Plan ahead: "Begin the pre-approval process early, even before you're ready to make an offer," advises Debbie Calixto, sales manager at mortgage lender loanDepot. This gives you time to improve your credit score debt-to-income ratio
"Begin the pre-approval process early, even before you're ready to make an offer," advises Debbie Calixto, sales manager at mortgage lender loanDepot. This gives you time to improve Focus on your timeline (not the market's): Buy when it makes sense for your life situation. "It's nearly impossible to predict or perfectly time the mortgage market," Calixto explains. If rates drop later, refinancing remains an option
Buy when it makes sense for your life situation. "It's nearly impossible to predict or perfectly time the mortgage market," Calixto explains. If rates drop later, Consider alternative loan products: "Check out adjustable-rate mortgages (ARMs)," suggests Glick. "[They] often start lower than fixed rates." These can be advantageous if you know you'll sell or refinance within a few years.
"Check out adjustable-rate mortgages (ARMs)," suggests Glick. "[They] often start lower than fixed rates." These can be advantageous if you know you'll sell or refinance within a few years. Explore rate buydowns: "If you've got cash to spare, paying points upfront to lower your rate can cut your monthly payment," Glick notes. This strategy is ideal if you plan to stay in your home long-term.
The bottom line
While rates could stay steady or drop slightly in May, they could also rise if market conditions shift. "If you're comfortable with your estimated monthly payment at current rates, it's wise to secure that rate," advises Calixto.
Now is a good time to contact several lenders for personalized guidance. Ask about rate-lock options, compare loan products and determine your comfort level with today's payments. And remember, the peace of mind from a secured rate often outweighs the gamble of waiting for drops.
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