Mortgage Rates & Fed Outlook: What May 2025 Means for Homebuyers and Homeowners

As the Federal Reserve kicks off its two-day policy meeting this week (May 6–7, 2025), financial markets, real estate professionals, and homeowners alike are watching closely. The decisions made by the Fed could have a significant impact on interest rates, inflation control, and the overall direction of the U.S. housing market.

At Peregrine Financial, we specialize in helping our clients navigate changing financial conditions with confidence. Here’s your comprehensive update on mortgage trends, housing market activity, and what to expect in the months ahead.

Are Mortgage Rates Going Up or Down in 2025?

As of May 6, 2025, the average 30-year fixed mortgage rate sits at 6.83%, while the 15-year fixed rate averages 6.01%. For homeowners looking to refinance, the average 30-year refinance rate is currently 6.91%.

Although these rates remain elevated compared to historic lows seen in 2020–2021, they have held relatively steady over the past few weeks. Most experts forecast that mortgage rates will remain within the 6%–7% range through the rest of 2025, barring any dramatic shifts in monetary policy from the Federal Reserve.

Housing Market Trends: Signs of Activity, But Affordability Concerns Persist

The U.S. housing market is showing mixed signals:

• Pending home sales rose sharply in March, up 6.1% month-over-month, the largest gain in over a year. This signals increased buyer interest as consumers adjust to the new interest rate environment.

• However, mortgage application volume has declined, and affordability remains a major hurdle. The average monthly mortgage payment in the U.S. has climbed to $2,870, marking a new high.

For many prospective homebuyers, elevated home prices combined with high mortgage rates are making homeownership feel out of reach—even as demand shows signs of rebounding.

What Is the Federal Reserve Expected to Do Next?

The May 2025 Federal Reserve meeting is expected to result in the Fed holding interest rates steady, as policymakers continue balancing inflation control with the goal of maintaining economic growth.

Additionally, new tariff policies on imported construction materials could drive up renovation and homebuilding costs. This may put upward pressure on home prices and limit supply in certain markets.

Key Takeaways for Homeowners and Buyers

• Mortgage rates in May 2025 remain high, though fluctuations have been minimal in recent weeks.

• Buyer demand is recovering, as seen in the surge of pending home sales, but affordability remains a serious concern.

• Economic policy, Fed decisions, and global trade developments will continue to shape the housing market and interest rate trends.

  
  

Should You Buy, Sell, or Refinance in 2025?

If you're wondering how today’s market conditions affect your financial goals—whether you're purchasing a home, considering a refinance, or exploring investment opportunities—our team at Peregrine Financial is here to guide you.

We combine deep market insight with personalized strategy to help you make informed, confident decisions in any market.

Contact us today to schedule a consultation.

How New Tariffs Could Push Home Prices and Mortgage Rates Higher in 2025

As trade tensions rise, so do concerns about their impact on the housing market. At Peregrine Financial, we’re closely tracking how new tariffs are affecting home prices, construction costs, and lending conditions in 2025.

Tariffs on Building Materials Are Raising Construction Costs

New tariffs on imported goods like lumber, steel, and drywall are driving up the cost of building new homes. According to the National Association of Home Builders, these tariffs could add between $17,000 and $22,000 to the cost of a newly constructed home.

This increase comes at a time when affordability is already a challenge for many buyers, especially those dealing with higher interest rates and tighter lending standards.

Mortgage Rates Could Be Affected by Inflation

While mortgage rates have recently dropped to around 6.55% for a 30-year fixed loan, that relief may be short-lived. As tariffs drive up the cost of materials and potentially contribute to inflation, the Federal Reserve could be forced to keep interest rates higher for longer, making it more expensive to borrow.

Rising inflation may also push up home improvement costs and reduce the availability of affordable housing stock, especially in high-demand markets.

What This Means for Investors and Homebuyers

For homebuyers, higher construction costs and uncertain lending conditions can make it harder to find or finance a property. For real estate investors, these changes could create new opportunities—particularly in alternative markets or through tax-advantaged investment vehicles.

Get Expert Guidance from Peregrine Financial

The financial landscape is shifting, and making the right move now can help you stay ahead. Whether you’re a homebuyer, investor, or just looking to strengthen your retirement plan, Peregrine Financial is here to help.

Book a consultation to explore several flexible strategies that can support your goals in today’s changing market.

Why Early 401(k) Withdrawals Are Rising in 2025—and What You Can Do About It

At Peregrine Financial, we’re keeping a close eye on a troubling economic trend: more Americans are withdrawing from their 401(k) retirement accounts early, often at significant financial cost.

Early 401(k) Withdrawals Are Surging

According to Empower, the second-largest retirement plan provider in the U.S., early withdrawals from 401(k)s are currently running 15% to 20% above historical averages. A recent report from Vanguard shows that 4.8% of account holders took early withdrawals in 2024, up from 3.6% in 2023 and just 2% during the pandemic.

Most early withdrawals are triggered by financial hardship—people using their retirement funds to cover urgent needs such as medical bills, mortgage payments, or avoiding foreclosure. For individuals under 59½, these withdrawals typically come with a 10% penalty, further eroding their long-term savings.

What This Means for Retirement Savers

This trend reflects a broader financial squeeze on American households, especially those with limited emergency savings. While accessing retirement funds in a crisis can provide short-term relief, it can also jeopardize future financial security.

How a Self-Directed IRA Can Help

One way to build more flexibility into your retirement strategy is by opening a Self-Directed IRA. Unlike traditional retirement accounts that are limited to stocks, bonds, and mutual funds, a Self-Directed IRA lets you invest in:

• Real estate

• Private equity or private lending

• Precious metals like gold or silver

• Startups and other alternative assets

This type of account can help you diversify your portfolio and better weather uncertain times, without sacrificing long-term growth.

Take Action with Peregrine Financial

If you’re concerned about how inflation, rising debt, or economic uncertainty could impact your retirement, now is the time to explore smarter strategies. At Peregrine Financial, we can walk you through the benefits of Self-Directed IRAs and help you make informed decisions for your future.

Contact us today to schedule a free consultation and start building a more resilient retirement plan.