Where do rates stand today?
- 30‑year fixed‑rate mortgage (FRM): 6.76 %
- 15‑year FRM: 5.92 %
(Freddie Mac Primary Mortgage Market Survey, week ending 1 May 2025)
After edging above 7 % over the winter, average 30‑year rates slipped back into the high‑6 % range in April and early May, staying below the first‑quarter average of 6.83 %
| Old example (7.77 %, Dec 2023) | Updated (5.92 %, May 2025) | |
|---|---|---|
| Monthly payment | $4 194 | $3 358 |
| Total repaid | $755 044 | $604 469 |
How expensive is it to take out a mortgage now?
Suppose you buy a $500 000 home with a $100 000 down‑payment and finance the remaining $400 000 over 15 years at the current 5.92 %:
Why are rates still elevated?
The same forces that pushed borrowing costs higher in 2023 and 2024 remain in play:
- 10‑year Treasury yield ≈ 4.25 % on 1 May 2025 – mortgage rates track the long end of the Treasury curve.
- Inflation is cooler but not yet at the Fed’s 2 % goal. CPI rose 2.4 % year‑on‑year in March 2025, its second consecutive monthly deceleration.
- Policy uncertainty and new trade‑tariff pressures have kept risk premiums elevated and home‑builder costs high.
Market impact
Mortgage demand is choppy: applications fell 4.2 % in the last reported week of April. Inventory remains tight because millions of owners are locked into sub‑4 % loans, limiting the supply of existing homes for sale.
When might rates fall?
Economists at the Mortgage Bankers Association expect the 30‑year FRM to edge down to about 5.9 % by year‑end 2025, provided inflation continues to cool and the Fed pivots to modest rate cuts in the second half of the year.
Tips for getting the lowest rate (2025 edition)
- Bump up your down‑payment. Crossing the 20 % threshold still eliminates PMI and can trim 20‑35 bps off the rate.
- Shop lenders aggressively. Rate spreads between the cheapest and priciest quotes are hovering around 60‑80 bps.
- Consider points only if you’ll keep the loan ≥ 7 years. The break‑even period lengthened as rates plateaued.
- Mind the fees. Many “discount” rates now bundle 1–1.5 % in origination or underwriting charges.
Should you buy now or wait?
In New Jersey, the median two‑bedroom rent is $2 598 a month. Financing the $495 000 median home at today’s 6.76 % (20 % down) costs roughly $3 358 a month—about $760 more than renting. If you can shoulder the higher payment for several years and plan to stay put long‑term, buying still builds equity; otherwise, waiting for rates (or prices) to soften could be the better call.
Bottom line: Rates have retreated from last autumn’s peaks but are still historically high. Locking in now makes sense if the payment fits your budget and you expect to refinance once rates slip closer to 6 % or below. Otherwise, keep saving, watch the inflation data, and let the market come to you.
