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Mortgage Rates in the US Surge on May 22, 2025 – Here’s What You Need to Know

Mortgage rates are making headlines again, and not in a good way. On May 22, 2025, rates took a sharp turn upward, fuelled by growing concerns about the national debt and its ripple effect on the bond market. The average 30-year fixed mortgage now stands at 6.93%, the highest we’ve seen in recent weeks.

If you’re in the market for a new home – or thinking about refinancing – these numbers matter. They don’t just affect your monthly payment; they shape your long-term financial outlook. Let’s unpack what’s happening, what it means for buyers and homeowners, and where we might be headed next.

Related: 10-Year US Interest Rate Forecast from the Experts

📈 Today’s Mortgage Snapshot (May 22, 2025)

The 30-year fixed jumped 13 basis points today alone – a big move in a short window. Adjustable-rate mortgages (ARMs) are now pushing into the mid-7% range, adding risk for anyone considering a variable-rate loan. Meanwhile, 15-year fixed loans remain comparatively steady, and may appeal to buyers prioritizing equity and long-term savings.

Related: Dave Ramseys Predictions for US Mortgage Rates in 2025

💡 What About Refinance Rates?

Refinancing today will cost you a bit more than taking out a new mortgage. Here are the latest numbers:

Why are refi rates higher? It often comes down to lender pricing and closing costs – many of which are built into refinanced loans. For homeowners looking to lock in a lower rate or shorten their loan term, it’s critical to crunch the numbers carefully.

Related: Unlocking Value in the US Housing Market

Mortgage Rates For Foreign National Mortgages

For us international investors buying investment property in the US, we rely on DSCR loans.

Right now, I’m seeing mortgage rates of between 6.75% and 8% with 30-year fixed interest terms and up to 75% loan to value.

Rate buydowns have become a key tool for international property investors to secure the best rate possible. By paying the lender some extra interest upfront, we can reduce the interest rate for the life life the loan.

Typically, a 1 percentage point buydown paid upfront at closing will buy down your interest rate by 0.25%. So on a $150,000 DSCR loan, you can buy down the interest rates by one full percentage point by paying 4 points at closing.

That’ll cost you about $5,500, and you’ll save about $36,000 interest and reduce your monthly payments by $100 – significantly improving your net monthly cashflow.

Related: The Best USA Mortgages for Foreign Nationals in 2025

🧮 Real-World Impact: How These Rates Affect You

Let’s look at a practical example. If you’re borrowing $300,000 on a 30-year fixed mortgage at today’s 6.93%:

Your monthly principal and interest payment: $1,995.85

Total cost over 30 years: Approximately $719,000

If you refinance at 7.04%, that monthly cost nudges up to around $2,008.19—an extra $12 per month that adds up to over $4,000 more over the life of the loan. That’s the power of even a slight rate increase.

Related: The Market Advantage for Foreign Property Investors in the USA

🏦 Why Are Rates Rising? Key Drivers

The surge in rates today isn’t random. It reflects deeper financial forces in motion:

🔹 National Debt Jitters:
Investors are worried about the sustainability of U.S. government borrowing. As confidence in federal fiscal policy wanes, bond yields rise—and mortgage rates tend to follow. The 10-year Treasury yield just crossed 4.5%, signalling increased borrowing costs across the board.

🔹 Inflation & Labor Trends:
The Fed walks a fine line between taming inflation and maintaining job growth. When inflation is high, rates typically rise to cool down the economy. But if unemployment climbs or growth falters, that could reverse.

🔹 Credit Profiles Matter:
Even in a high-rate environment, strong borrowers can still secure better deals. A higher credit score, lower debt load, and a larger down payment can all improve the terms a lender offers you.

🔹 Federal Reserve Policy:
The Fed doesn’t directly control mortgage rates, but its policy signals carry weight. If the central bank keeps interest rates elevated to fight inflation, mortgage rates usually stay high too.

Related: Hidden Costs of Buying Cheap Investment Property in the USA

🏠 Fixed vs. Adjustable Mortgages – What’s Right for You?

Choosing between a fixed-rate mortgage and an adjustable-rate one (ARM) is more important than ever.

Fixed-Rate Mortgages: You lock in your interest rate for the entire term—making it easier to budget long-term.

ARMs: Typically start lower, but after the initial period (like 5 or 7 years), they adjust based on the market. In today’s volatile rate environment, ARMs might look appealing—but they carry risk if rates stay high or climb even higher.

🔮 Looking Ahead: What’s the Forecast?

Will rates keep climbing? Or is this just a short-term spike?

Here’s what two major players are predicting for the coming quarters:

The overall trend suggests a slow decline in rates through 2025 and into early 2026 – but we’re still well above the ultra-low rates of 2020 and 2021. Whether we actually see rates drop depends heavily on inflation, employment, and whether the Fed believes it’s safe to pivot toward more accommodative policy.

Related: Local Market Expertise is Essential for Overseas Property Investors

🔍 Market Sentiment: What Buyers and Sellers Are Feeling

Right now, both homebuyers and current homeowners are feeling squeezed. The so-called “rate lock-in effect” is real. Many homeowners who secured mortgages at 3% or 4% don’t want to give them up, which keeps inventory tight. At the same time, new buyers are finding that even modest homes come with much higher monthly costs than just a few years ago.

Still, some analysts expect buyer demand to slowly return as people adjust to this new normal. Home sales may remain below historic averages, but any stabilization in rates could give hesitant buyers the push they need to re-enter the market.

Related: Successful Foreign Investors Use Local Market Data to Identify Opportunities

🧭 Final Thoughts: Navigating a High-Rate Market

The big takeaway from today’s rate spike? Stay informed, stay flexible, and don’t panic.

If you’re buying soon: Focus on what you can control… your credit score, down payment, and loan type.

If you’re refinancing: Carefully evaluate whether a refinance makes financial sense given the closing costs and term.

If you’re watching from the sidelines: Keep an eye on inflation, Fed moves, and Treasury yields. They’ll tell you where rates are likely headed.

As always, markets are dynamic, and the story can change quickly. What matters most is how you prepare and how well you understand the forces shaping your financial future.

FREE DOWNLOAD: 10 Costly Mistakes Foreigners Make Buying U.S. Real Estate