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Mortgage Interest Rates Forecast

Rates swing on global tensions, but signals from the economy could keep them elevated.

Kate Wood
Johanna Arnone
Updated
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Mortgage rates are zig-zagging right now, which is why headlines seem all over the place.
Over the past week, rates on a 30-year fixed-rate mortgage actually rose to about 6.24% APR, but day-to-day they’ve been swinging sharply — including a noticeable drop as markets reacted to possible progress toward ending the war in Iran. That conflict has been a major driver of rate movement, since it’s pushed oil prices higher and fueled inflation fears. When inflation worries rise, yields on 10-year T-notes go up — and mortgage rates tend to follow. So any shift in the war, good or bad, can quickly send rates down or back up again.
Looking ahead, the bigger story may be the U.S. economy and the Federal Reserve. Inflation is still running above the Fed’s target, while the job market has been surprisingly strong — a mix that makes it less likely the Fed will cut rates anytime soon. And even though the Fed doesn’t directly set mortgage rates, its policies heavily influence them. If inflation stays stubborn and employment holds steady, mortgage rates could remain elevated for a while. In other words, while global events are driving short-term swings, the longer-term outlook points to rates staying higher than many borrowers would like.
» MORE: Is it a good time to buy a house?

May mortgage rates forecast

Mortgage rates are likely to remain relatively stable in May. There's no doubt that we'll have daily ups-and-downs, but a major dive is unlikely to happen.
On the plus side, we're also unlikely to see a spike unless there are major negative developments in Iran. While the ceasefire has kept a lid on that conflict for a while, renewed aggression could alarm markets and push up mortgage rates. Unfortunately, we can't count out that possibility.

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