Mortgage Rates Decline Across Terms, 5/1 ARM Drops 6 Basis Points

On June 5, 2025, the average interest rate for a 5/1 adjustable-rate mortgage (ARM) in the U.S. was reported at 6.05%, showing a decrease of 6 basis points from the previous week. This rate is significantly lower than the average rate for a 30-year fixed-rate mortgage, which stood at 6.861% on June 4, 2025. The 5/1 ARM rate also experienced slight fluctuations, averaging 6.82% on the same day. This trend suggests a general downward movement in mortgage rates, with the 30-year fixed-rate mortgage dropping to 6.97% on June 3, 2025, its lowest point since early May. The 15-year fixed-rate mortgage also saw a decline, with an average rate of 6.16% on June 3, 2025, down from 6.19% the previous week. The 5/1 ARM rate followed a similar pattern, decreasing to 6.17% from 6.28% the week before. These adjustments reflect a broader trend of mortgage rates falling across various terms, including jumbo loans, which also saw a decrease to 6.97% from 7.02% the previous week.

The decline in mortgage rates is likely to have a positive impact on homebuyers, as lower rates can make homeownership more affordable. However, the overall housing market remains challenging, with the median national existing-home price reaching a new record of $414,000 in April. Despite the slight decrease in mortgage rates, borrowing costs remain high, hovering near 7%. This situation underscores the need for a meaningful decline in mortgage rates to fully realize the pent-up housing demand. The current economic environment, marked by concerns about stagflation and unemployment, adds to the uncertainty surrounding future mortgage rate movements. While the Federal Reserve's recent minutes highlighted these concerns, the long-term implications for mortgage rates remain unclear. Homebuyers and refinancers are advised to consider their individual financial situations and long-term plans when making decisions about purchasing or refinancing a home.