Category Credit & Debt

Mortgage rates have recently climbed, making it more expensive to purchase a home in the United States. With the average 30-year fixed-rate mortgage nearing 7%, homebuyers face higher monthly payments and loans are becoming costlier. The main reasons causing this rise include Moody's downgrade of the United States' credit rating and worries about a major proposed tax bill. This bill could significantly increase the national debt, raising uncertainty among investors. Even though the Federal Reserve decided not to increase its own key interest rate at its most recent meeting, mortgage rates have continued to rise due to these broader economic concerns. Experts suggest that new homebuyers should plan carefully and prepare for interest rates to remain high through the foreseeable future.

Mortgage rates recently climbed higher after the credit rating agency Moody's downgraded the U.S. credit rating. A lower credit rating means investors see lending money to the U.S. as slightly riskier, leading banks and lenders to charge higher interest rates on mortgages. Currently, the average rate for a 30-year fixed mortgage is 6.96%, while the 15-year mortgage averages 6.15%. Inflation remains high, and ongoing worries about a possible global trade war and an economic slowdown have further contributed to less affordable home loan options. Although the Federal Reserve has kept interest rates steady throughout their May meetings, the uncertainty from the downgrade and economic challenges means figuring out how to afford a home is becoming harder for many American families.

On May 19, 2025, mortgage interest rates increased slightly to an average of 6.90%, adding to concerns about affordability in the housing market. This rate rise comes amid ongoing economic uncertainty related to inflation staying higher than what the Federal Reserve prefers, potential recession risks, and global trade disagreements. Previously, in 2024, the Federal Reserve lowered rates three times to encourage economic activity but has held steady through early 2025 as policymakers monitor the economy. Due to the higher borrowing costs, fewer Americans may be able to comfortably afford homes, highlighting how challenges in the economy can directly affect individual finances and major life decisions like buying a house.

As of May 15, 2025, mortgage rates in the United States have increased slightly due to uncertainty surrounding tariffs and inflation, as well as the Federal Reserve's decision not to change interest rates. The average 30-year fixed mortgage rate rose to 6.89%, while the rate for a 15-year mortgage climbed to 6.06%. Economic tensions over continued tariff disputes, particularly those involving trade between the U.S. and China, have investors worried. Tariffs can lead to higher prices on goods, contributing to inflation and potentially slowing down the economy. While the U.S. recently announced a temporary reduction in certain tariffs, concerns over longer-term economic stability remain, keeping both homebuyers and lenders concerned about future interest rate changes.

Mortgage rates increased slightly this week because markets are dealing with ongoing inflation worries and uncertainty around international trade. Rates on mortgages for 30-year and 15-year loans rose moderately, and adjustable rates went up even more significantly. This increase came after the United States and China reached a temporary agreement to lower tariffs, creating optimism but also uncertainty in the financial markets. Economists and Federal Reserve officials have cautioned that continued challenges around tariffs and trade could make it harder to reduce inflation, adding pressure that may keep mortgage rates high in the near future.

Mortgage rates rose slightly this week, bringing the average rate for a 30-year fixed mortgage up to 6.89%. This increase is partly due to ongoing uncertainty in the economy and recent cautious decisions by the Federal Reserve. Although inflation slowed in April according to the latest data, it was not enough to prompt Federal Reserve policymakers to decrease interest rates yet. Homebuyers and investors remain cautious due to worries about both domestic economic stability and global developments, which could keep home borrowing costs high in the near future.