The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) in the US edged up slightly to 6.86% in the week ended May 9th, 2025, from 6.84% the previous week, according to data from the Mortgage Bankers Association (MBA).
US mortgage rates edge up
Despite the minor uptick, rates remain below the 7.08% recorded a year earlier, reflecting a general easing trend from the highs seen in late 2023.
Meanwhile, US mortgage applications continued to inch higher, rising by 1.1% from the previous week, slightly extending the strong 11% surge recorded during the prior period. The modest increase came as borrowing costs broadly stabilized, with global financial markets gaining some relief from the suspension of more aggressive reciprocal tariffs between the US and China. The easing of trade tensions helped rekindle some home-buying interest following a sharp slump in April, when elevated rates, economic uncertainty, and weakened consumer sentiment weighed heavily on housing demand.
Applications for mortgages to purchase new homes climbed by 2.3% week-on-week, marking the second consecutive increase, as prospective buyers appeared to take advantage of relatively steady rates and improved sentiment around the near-term economic outlook. However, demand remained below levels seen earlier in the year, with affordability challenges and tight housing inventories continuing to limit upside momentum.
Applications climb
In contrast, applications for mortgage refinancing—a segment more sensitive to short-term fluctuations in interest rates—eased slightly, falling by 0.4% from the previous week. The dip in refinancing activity suggests that most borrowers who could benefit from rate cuts have already acted during earlier periods of lower rates, while those remaining are less likely to refinance unless there is a more substantial decline in borrowing costs.
Looking ahead, market participants are closely watching upcoming economic data, particularly inflation and employment reports, for clues on the Federal Reserve’s future policy direction. While expectations for aggressive rate cuts have been tempered amid sticky inflationary pressures, any signs of a cooling labor market or weaker-than-expected inflation readings could revive calls for further monetary easing, potentially providing additional support to the housing market.
