Mortgage Interest Rate Predictions: Will Rates Go Down in May 2023?

May 25, 2023 - 17 min read

Mortgage rate forecast for next week (May 29-June 2)

Debt ceiling unrest led to a big jump in interest rates this week.

The average 30-year fixed rate mortgage (FRM) rose from 6.39% on May 18 to 6.57% on May 25, according to Freddie Mac.

“Mortgage rates moved higher this week as uncertainty over a potential US debt default is causing investors to pull back. This is coming on top of ongoing credit tightening due to banking sector weakness and comments from Federal Reserve Bank officials reiterating the view that inflation may still be too high,” said Orphe Divounguy, senior macroeconomist at Zillow Home Loans.

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Will mortgage rates go down in May?

Mortgage rates fluctuated significantly to open 2023. In the first quarter, the average 30-year fixed rate went as low as 6.09% on Feb. 2 and climbed up to 6.73% on March 9, according to Freddie Mac.

The range can be largely attributed to the Federal Reserve’s ongoing fight against inflation, juxtaposed with uncertainty in the banking sector sparked by Silicon Valley Bank’s collapse. However, with duress permeating the financial market and helping to ease inflation, the Fed is expected to make smaller rate hikes for the rest of 2023 — and potentially stop making them altogether.

With the economy likely heading into a recession, it’s possible we’ve already seen the peak of this rate cycle. Of course, interest rates are notoriously volatile and could tick back up on any given week.

Experts from CJ Patrick Company, First American, the National Association of Realtors, and others weigh in on whether 30-year mortgage rates will climb, fall, or level off in May.

Expert mortgage rate predictions for May

Ralph DiBugnara, president at Home Qualified

Prediction: Rates will drop

“This should be an interesting month as the Federal reserve will look to possibly change their policy over the next quarter of the year. I see them pausing or reducing their interest rate raises as inflation seems to finally be subsiding some. I see the 30-year fixed average at about 6.25% and the 15-year fixed at 5.75%.

We are looking at a more stable market through the summer I believe with rates staying within .25% of where they are now one way or the other. Unless there is a significant economic event what we are seeing now is what it will be.”

Nadia Evangelou, senior economist & director of forecasting at the National Association of Realtors

Prediction: Rates will drop

“Mortgage rates will continue to fluctuate in the following months. While there is some calming in the banking sector, economic data also indicates an economy that is still strong. But, as long as inflation eases, the overall trend for mortgage rates will continue downward. Rates will likely hover into the low 6% range in May.”

Danielle Hale, chief economist at

Prediction: Rates will moderate

“This year’s ups and downs are driven by shifting perspectives on just how close we are to the end of the Fed’s tightening cycle and how smooth or rough the economic landing will be. May could be a rocky month for mortgage rates. The Fed meets early in the month and is widely expected to raise the policy rate by 25 basis points.

Because this move is well anticipated, it should not cause a major shift in mortgage and other interest rates. While the most likely trajectory for mortgage rates is slightly higher in advance of the Fed meeting and slightly lower after the Fed meeting, data surprises could reshape these trends.”

Selma Hepp, chief economist at Corelogic

Prediction: Rates will moderate

“Mortgage rates could pause their downward trend and inch up again in anticipation of the upcoming Fed meeting. But while a 25-basis-point increase has already been accounted for in the investor community, future mortgage rate movements will not only depend on Fed’s rate decisions but also on banks’ liquidity, credit tightening and resultant pricing of mortgages.”

Odeta Kushi, deputy chief economist at First American

Prediction: Rates will drop

“Inflation is proving to be sticky, but there is reason to believe that it will fall over the course of the next several months, especially as declining housing costs drag overall inflation down. As a result of these dynamics, it’s likely that the Federal Reserve will hike interest rates for the tenth consecutive time in May, which may represent the peak for the current round of policy tightening.

Fed tightening may put some upward pressure on mortgage rates in the near term, but ultimately more certainty about the Fed’s actions will help to smooth out some of the volatility we have seen with mortgage rates. Of course, if incoming inflation data surprises to upside and prompts more aggressive contractionary monetary policy from the Fed, then mortgage rates could increase. Conversely, if inflation surprises to the downside or recession fears intensify, mortgage rates could fall.”

Rick Sharga, president and CEO at CJ Patrick Company

Prediction: Rates will moderate

“Mortgage rates have largely been moving sideways for the past month as the market sorts out what the fallout from recent bank problems might be, and what the implications are for future rate hikes from the Federal Reserve. It seems likely that rates in May will likewise stay in a fairly tight band somewhere between 6.25-6.75%.

If inflation numbers continue to decline, consumer spending doesn’t spike and the jobs market doesn’t show explosive growth, rates will probably come in at the lower end of that range. If inflation rises, or the economy shows unexpected strength, rates will probably end up at the high end of this range or slightly higher. It still seems most likely that rates will gradually decline over the course of the year once the Federal Reserve feels that inflation is under control and stops raising the Fed Funds rate. But for May, I expect rates to be pretty similar to where they were in April.”

Mortgage interest rates forecast next 90 days

As inflation ran rampant in 2022, the Federal Reserve took action to bring it down and that led to big interest rate growth. The average 30-year fixed-rate mortgage more than doubled within the course of the year.

As inflation gradually cools, the size of the Fed’s rate hikes are coming down. Additionally, the likelihood of a recession has many experts believing mortgage interest rates will move within a tighter range compared to the spikes we saw in early 2022.

Of course, rates could rise on any given week or if another global event causes widespread uncertainty in the economy.

Mortgage rate predictions for early 2023

The 30-year fixed-rate mortgage averaged 6.57% as of May 25, according to Freddie Mac. None of the five major housing authorities we looked at projected 2023’s second quarter average to finish above that.

Fannie Mae and the Mortgage Bankers Association sit at the low end of the group, predicting the average 30-year fixed interest rate to settle at 6.1% and 6.2%, respectively, for Q2. Meanwhile, the National Association of Realtors and National Association of Home Builders had the highest forecasts of 6.3% and 6.56%.

Housing Authority30-Year Mortgage Rate Forecast (Q2 2023)
Fannie Mae6.10%
Mortgage Bankers Association6.20%
Wells Fargo6.25%
National Association of Realtors6.30%
National Association of Home Builders6.56%
Average Prediction6.28%

Mortgage rates grew for the second week in a row, as inflation continues running too high.

The 30-year fixed rate increased from 6.39% on May 18 to 6.57% on May 25. The average 15-year fixed mortgage rate also surged from 5.75% to 5.97%.

MonthAverage 30-Year Fixed Rate
April 20224.98%
May 20225.23%
June 20225.52%
July 20225.41%
August 20225.22%
September 20226.11%
October 20226.90%
November 20226.81%
December 20226.36%
January 20236.27%
February 20236.26%
March 20236.54%
April 20236.34%

Source: Freddie Mac

After hitting record-low territory in 2020 and 2021, mortgage rates climbed to a 14-year high in 2022. Many experts and industry authorities believe they will follow a downward trajectory in 2023. Whatever happens, interest rates are still below historical averages.

Dating back to April 1971, the fixed 30-year interest rate averaged around 7.8%, according to Freddie Mac. So if you haven’t locked a rate yet, don’t lose too much sleep over it. You can still get a good deal, historically speaking — especially if you’re a borrower with strong credit.

Just make sure you shop around to find the best lender and lowest rate for your unique situation.

Many mortgage shoppers don’t realize there are different types of rates in today’s mortgage market. But this knowledge can help home buyers and refinancing households find the best value for their situation.

Following are 3-month mortgage rate trends for the most popular types of home loans: conventional, FHA, VA, and jumbo.

March 2023February 2023January 2023
Conforming Loan Rates6.40%6.68%6.16%
FHA Loan Rates6.37%6.49%6.12%
VA Loan Rates6.06%6.25%5.74%
Jumbo Loan Rates6.56%6.43%6.36%

Source: Black Knight Originations Market Monitor Report

Which mortgage loan is best?

The best mortgage for you depends on your financial situation and your goals.

For instance, if you want to buy a high-priced home and you have great credit, a jumbo loan is your best bet. Jumbo mortgages allow loan amounts above conforming loan limits, which max out at $ in most parts of the U.S.

On the other hand, if you’re a veteran or service member, a VA loan is almost always the right choice. VA loans are backed by the U.S. Department of Veterans Affairs. They provide ultra-low rates and never charge private mortgage insurance (PMI). But you need an eligible service history to qualify.

Conforming loans and FHA loans (those backed by the Federal Housing Administration) are great low-down-payment options.

Conforming loans allow as little as 3% down with FICO scores starting at 620. FHA loans are even more lenient about credit; home buyers can often qualify with a score of 580 or higher, and a less-than-perfect credit history might not disqualify you.

Finally, consider a USDA loan if you want to buy or refinance real estate in a rural area. USDA loans have below-market rates — similar to VA — and reduced mortgage insurance costs. The catch? You need to live in a ‘rural’ area and have moderate or low income to be USDA-eligible.

Mortgage rate strategies for May 2023

Mortgage rates displayed their famous volatility to open 2023. Ongoing inflation battles and Fed hikes drove growth, then uncertainty in the banking sector led to downtrends.

At its May meeting, the Fed made a relatively small hike amid the banking turmoil. The central bank also noted it will adjust its policies accordingly to keep inflation coming down and signaled this may be its final hike of the year.

Here are just a few strategies to keep in mind if you’re mortgage shopping in the coming months.

Be ready to move quickly

Indecision can lead to failure or missed opportunities. That holds true in home buying as well.

Although the housing market is becoming more balanced than the recent past, it still favors sellers. Prospective borrowers should take the lessons learned from the last few years and apply them now even though conditions are less extreme.

“Taking too long to decide to make an offer can lead to paying more for the home at best and at worst to losing out on it entirely. Buyers should get pre-approved (not pre-qualified) for their mortgage, so that the seller has some certainty about the deal closing. And be ready to close quickly — a long escrow period will put you at a disadvantage.

And it’s definitely not a bad idea to work with a real estate agent who has access to “coming soon” properties, which can give a buyer a little bit of a head start competing for the limited number of homes available,” said Rick Sharga.

Buyer demand is lower than a typical year, but the market usually heats up in spring and summer. Being decisive (and prepared) should only play to your advantage.

Shopping around isn’t only for the holidays

Since interest rates can vary drastically from day to day and from lender to lender, failing to shop around likely leads to money lost.

Lenders charge different rates for different levels of credit scores. And while there are ways to negotiate a lower mortgage rate, the easiest is to get multiple quotes from multiple lenders and leverage them against each other.

“For potential home buyers, it’s important to get quotes from multiple lenders for a mortgage, as rates can vary dramatically, especially during such a volatile period,” said Odeta Kushi.

As the mortgage market slows due to lessened demand, lenders will be more eager for business. While missing out on the rock-bottom rates of 2020 and 2021 may sting, there’s always a way to use the market to your advantage.

How to shop for interest rates

Rate shopping doesn’t just mean looking at the lowest rates advertised online because those aren’t available to everyone. Typically, those are offered to borrowers with great credit who can put a down payment of 20% or more.

The rate lenders actually offer depends on:

  • Your credit score and credit history
  • Your personal finances
  • Your down payment (if buying a home)
  • Your home equity (if refinancing)
  • Your loan-to-value ratio (LTV)
  • Your debt-to-income ratio (DTI)

To figure out what rate a lender can offer you based on those factors, you have to fill out a loan application. Lenders will check your credit and verify your income and debts, then give you a ‘real’ rate quote based on your financial situation.

You should get three to five of these quotes at a minimum, then compare them to find the best offer. Look for the lowest rate, but also pay attention to your annual percentage rate (APR), estimated closing costs, and ‘discount points’ — extra fees charged upfront to lower your rate.

This might sound like a lot of work. But you can shop for mortgage rates in under a day if you put your mind to it. And shaving just a few basis points off your rate can save you thousands.

Mortgage interest rate FAQ

What are current mortgage rates?

Current mortgage rates are averaging 6.57% for a 30-year fixed-rate loan and 5.97% for a 15-year fixed-rate loan, according to Freddie Mac’s latest weekly rate survey. Your individual rate could be higher or lower than the average depending on your credit score, down payment, and the lender you choose to work with, among other factors.

Will mortgage rates go down next week?

Mortgage rates could decrease next week (May 29-June 2, 2023) if the mortgage market takes a cautious approach to a possible recession. However, rates could rise if lenders account for the Federal Reserve taking measures to counteract inflation or if a global event brings economic uncertainty.

Will mortgage interest rates go down in 2023?

If the historically high inflation of 2022 continues to dissipate and the economy falls into a recession, it’s likely mortgage rates will decrease in 2023. Although, it’s important to remember that interest rates are notoriously volatile and are driven by many factors, so they can rise during any given week.

Will mortgage interest rates go up in 2023?

Mortgage rates may continue to rise in 2023. High inflation, a strong housing market, and policy changes by the Federal Reserve have all pushed rates higher in 2022. However, if the U.S. does indeed enter a recession, mortgage rates could come down.

What is the lowest mortgage rate right now? 

Freddie Mac is now citing average 30-year rates in the 6 percent range. If you can find a rate in the 4s or 5s, you’re in a very good position. Remember that rates vary a lot by borrower. Those with perfect credit and large down payments may get below-average interest rates, while poor-credit borrowers and those with non-QM loans could see much higher rates. You’ll need to get pre-approved for a mortgage to know your exact rate.

Will there be a housing crash? 

For the most part, industry experts do not expect the housing market to crash in 2023. Yes, home prices are over-inflated. But many of the risk factors that led to the 2008 crash are not present in today’s market. Low inventory and massive buyer demand should keep the market propped up next year. Plus, mortgage lending practices are much safer than they used to be. That means there’s not a subprime mortgage crisis waiting in the wings.

What is the lowest mortgage rate ever?

At the time of this writing, the lowest 30-year mortgage rate ever was 2.65%. That’s according to Freddie Mac’s Primary Mortgage Market Survey, the most widely used benchmark for current mortgage interest rates.

Should I lock my rate now or wait?

Locking your rate is a personal decision. You should do what’s right for your situation rather than trying to time the market. If you’re buying a home, the right time to lock a rate is after you’ve secured a purchase agreement and shopped for your best mortgage deal. If you’re refinancing, you should make sure you compare offers from at least three to five lenders before locking a rate. That said, rates are rising. So the sooner you can lock in today’s market, the better.

Is now a good time to refinance? 

That depends on your situation. It’s a good time to refinance if your current mortgage rate is above market rates and you could lower your monthly mortgage payment. It might also be good to refinance if you can switch from an adjustable-rate mortgage to a low fixed-rate mortgage; refinance to get rid of FHA mortgage insurance; or switch to a short-term 10- or 15-year mortgage to pay off your loan early.

Is it worth refinancing for 1 percent? 

It’s often worth refinancing for 1 percentage point, as this can yield significant savings on your mortgage payments and total interest payments. Just make sure your refinance savings justify your closing costs. You can use a mortgage calculator or speak with a loan officer to crunch the numbers.

How do I shop for mortgage rates? 

Start by choosing a list of three to five mortgage lenders that you’re interested in. Look for lenders with low advertised rates, great customer service scores, and recommendations from friends, family, or a real estate agent. Then get pre-approved by those lenders to see what rates and fees they can offer you. Compare your offers (Loan Estimates) to find the best overall deal for the loan type you want.

What are today’s mortgage rates?

Mortgage rates are rising, but borrowers can almost always find a better deal by shopping around. Connect with a mortgage lender to find out exactly what rate you qualify for.

1Today's mortgage rates are based on a daily survey of select lending partners of The Mortgage Reports. Interest rates shown here assume a credit score of 740. See our full loan assumptions here.

Selected sources:

Paul Centopani
Authored By: Paul Centopani
The Mortgage Reports Editor
Paul Centopani is a writer and editor who started covering the lending and housing markets in 2018. Previous to joining The Mortgage Reports, he was a reporter for National Mortgage News. Paul grew up in Connecticut, graduated from Binghamton University and now lives in Chicago after a decade in New York and the D.C. area.