Mortgage rates remain stubbornly high, frustrating both homebuyers and homeowners hoping to refinance. As of mid-May, the average 30-year fixed mortgage rate sits at 6.81%, while 15-year loans hover around 5.92%, nearly double the record lows seen during the pandemic. Despite the wishful thinking, current data suggests there’s little relief coming soon. Experts advise focusing less on chasing lower rates and more on your broader homeownership strategy.
According to Freddie Mac, 30-year mortgage rates have stayed below 7% for 17 straight weeks, a small victory but far from the sub-3% dreams of 2020 and 2021. Over the past year, rates have fluctuated between 6.08% and 7.03%. While occasional dips offer brief relief, there’s no clear signal that rates will drop meaningfully in the short term. If you’re hoping for a sharp decline, you might be waiting well into next year or longer.
The Federal Reserve held rates steady at its May meeting and is expected to do the same in June. Mortgage rates don’t directly follow the Fed’s benchmark, but they’re heavily influenced by it. Unless the Fed sees a major drop in inflation or employment weakness, interest rates are likely to stay on a slow and steady path, not the nosedive that buyers are hoping for.
Another key influencer of mortgage rates, the 10-year Treasury yield, also points to stagnation. Currently at 4.49%, it’s only slightly above last year’s figure. Mortgage lenders typically add a spread to this yield to determine loan rates, and while that spread has narrowed slightly, it hasn’t been enough to push mortgages into the low-6% or high-5% territory many buyers want. The math simply doesn’t support major drops for now.
So, should you hold off buying? Not necessarily. While high interest rates sting, home prices are the bigger problem. Demand still outpaces supply, keeping prices elevated. Even in a potential recession, a rate drop could spark more buying competition, driving home prices up further. The dream scenario of both low rates and falling home prices is unlikely anytime soon.
Instead of waiting for a miracle, consider what you can afford today. That could mean buying a smaller property, venturing into new neighborhoods, or exploring financial tools like FHA 203(k) loans, buydowns, or 15-year mortgages. A longer commute or shared-wall living might be worth it to start building equity now. In this market, adaptability beats waiting on the sidelines.
