Mortgage Rates Surge 0.55% Amid Recession Fears

Mortgage rates in the United States have experienced a significant increase, with the 30-year mortgage rate reaching 6.96% as of May 20, 2025. This upward trend follows a period of fluctuation, where rates began at 7.04% on May 19, 2025, before dropping to 6.99% by midday. The trend continued into May 21, 2025, with the 30-year mortgage rate rising by 0.55%, the 15-year mortgage rate increasing by 1.66%, and jumbo mortgage rates surging by 2.57%. Notably, jumbo 30-year mortgage rates saw a substantial jump of 9 basis points on Monday, pushing the average back above the 7% mark to 7.06%.

The recent rise in mortgage rates can be attributed to several factors, including concerns over a potential recession and the U.S. debt downgrade. These economic uncertainties have led to an increase in mortgage rates, despite earlier forecasts predicting a gradual decline in rates, potentially reaching 6% by the end of 2025. The current average 30-year fixed-mortgage rate stands at 6.96%, reflecting the market's response to these economic pressures.

The impact of rising mortgage rates is already being felt in the housing market. The contract rate on a 30-year mortgage increased by 6 basis points to 6.92% in the week ended May 16, 2025. This increase has slowed home sales, as higher borrowing costs make it more challenging for potential buyers to afford mortgages. The 30-year fixed refinance rate saw a slight decrease to 6.97% on May 21, 2025, while the 15-year fixed refinance rate averaged 5.94%.

Looking ahead, the outlook for mortgage rates remains uncertain. An expert poll conducted for the period of May 22-28, 2025, revealed that 57% of respondents expect rates to continue rising, while 7% anticipate a decrease, and 36% predict rates to remain unchanged. This mixed sentiment underscores the volatility in the mortgage market, as economic indicators and policy changes continue to influence rate movements. Borrowers and industry stakeholders will need to closely monitor these developments to navigate the evolving landscape effectively.