Mortgage rates ticked up again on Thursday, driven by rising 10-year Treasury yields after President Donald Trump advocated for listing the government-backed Freddie Mac and Fannie Mae on a major stock exchange.
The average rate on 30-year fixed home loans edged up to 6.89% for the week ending May 29, up from 6.86% last week, according to Freddie Mac. Rates averaged 7.03% during the same period in 2024.
“This week, the 30-year fixed-rate mortgage rose slightly higher,” says Sam Khater, Freddie Mac’s chief economist. “Aspiring buyers should remember to shop around for the best mortgage rate, as they can potentially save thousands of dollars by getting multiple quotes.”
Rates are now more than 10 basis points higher than they were in the beginning of May, coming on the heels of the mounting uncertainty over Trump’s tariff policy—and following the recent decision by the credit rating agency Moody’s to downgrade the U.S. credit over the federal government’s climbing debt.
The president added to the confusion this week by saying that were Freddie Mac and Fannie Mae taken public, they would still retain government guarantees.
“I am working on TAKING THESE AMAZING COMPANIES PUBLIC, but I want to be clear, the U.S. Government will keep its implicit GUARANTEES, and I will stay strong in my position on overseeing them as president,” Trump wrote on his Truth Social account on Tuesday.
Created by the U.S. Congress, Freddie Mac and Fanie Mae play a crucial role in the mortgage market by ensuring liquidity and stability. Since the 2008 financial crisis, both agencies have been under government conservatorship, subjected to strict oversight by the Federal Housing Finance Agency.
Outside the Washington, D.C. Beltway, the U.S. housing market continues to show signs of cooling.
“High mortgage rates will continue to pose significant challenges for homebuyers,” says Realtor.com® senior economist Jake Krimmel.
Although new listings and overall home inventory climbed last month, the number of for-sale properties remains well below pre-pandemic levels.
“At the same time, elevated mortgage rates and rising home prices are further straining affordability,” says Krimmel.
According to a recent Realtor.com survey, nearly 2 in 5 homebuyers cited budget constraints as a major barrier to homeownership.
But despite the stubbornly elevated mortgage rates, there is some good news on the horizon for homebuyers: Month-over-month home prices are falling on a seasonally adjusted basis.
On top of that, homes are waiting for buyers longer, and nearly 1 in 5 listings saw price cuts last month.
How mortgage rates are calculated
Mortgage rates are determined by a delicate calculus that factors in the state of the economy and an individual’s financial health. They are most closely linked to the 10-year Treasury bond yield, which reflects broader market trends, like economic growth and inflation expectations. Lenders reference this benchmark before adding their own margin to cover operational costs, risks, and profit.
So when the economy flashes warning signs of rising inflation, Treasury yields typically increase, prompting mortgage rates to go up. Conversely, when Treasury yields decrease, mortgage rates fall.
The mortgage rates you’re offered by a lender, however, go beyond these benchmarks and take some of your personal factors into account. Your lender will closely scrutinize your financial health—including your credit score, loan amount, property type, size of down payment, and loan term—to determine your risk. Those with stronger financial profiles are deemed as lower risk and typically receive lower rates, while borrowers perceived as higher risk get higher rates.
Mortgage applications dipped by 2% from a week ago, according to the latest data from the Mortgage Bankers Association’s Weekly Mortgage Application survey ending on March 21.
During the same period, purchase applications, involving the offer and agreement to buy a property, increased 1% from a week ago and 7% year over year, driven by a surge in FHA loan applications, according to Joel Kan, MBA’s vice president and deputy chief economist.
How your credit score affects your mortgage
Your credit score plays a role when you apply for a mortgage. A credit score will determine whether you qualify for a mortgage and the interest rate you’ll receive. The higher the credit score, the lower the interest rate you’ll qualify for.
The credit score you need will vary depending on the type of loan. A score of 620 is a “fair” rating. However, people applying for a Federal Housing Administration loan might be able to get approved with a credit score of 500, which is considered a low score.
Different types of mortgage loan programs have their own minimum credit score requirements. Some lenders have stricter criteria when evaluating whether to approve a loan. They want to make sure you’re able to pay back the loan.
