Experts Predict Mortgage Rates Will Keep Rising In May, But Say ‘Unprecedented’ Rise Should at Least Slow Down

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Mortgage rates are poised to continue the upward trend in May, experts believe. But there is a level of economic uncertainty as rates aren't expected to move up as dramatically as before.

“The increase that we’ve seen over the past couple of months has been unprecedented. We’ve never seen mortgage rates rise as quickly as they have,” says Ralph McLaughin, chief Economist at Kukun, a real estate technology platform. “[That pace] is very unlikely to continue.”

Behind the surge in interest rates lies inflation, which hit 8.5% according to the most recent data — a year-over-year level we haven't seen in over four decades. In response to elevated inflation, the Federal Reserve has begun raising short-term interest rates and is expected to accelerate this rate increase.

“What’s happened over the last couple months is that inflation has persisted longer than people expected and at a higher rate than people expected,” says Danielle Hale, chief Economist with “That’s raising concerns and the Fed, as a result is … raising short-term interest rates faster than was expected even a couple of weeks ago.”

Rising rates don't have to derail your homebuying plans. Although there is a psychological barrier when facing mortgage rates that are nearly double what they were just 16 months ago, “in the grand scheme of things 5% still isn't that high of a rate,” McLaughlin says.

Here’s what three housing experts have to say about May’s mortgage rate trends and navigating today’s housing market.

How Will the Russian Invasion and China's COVID Lockdown Impact Mortgage Rates?

Where mortgage rates move typically has a strong correlation with long-term bond rates and bond rates are heavily influenced by the Federal Reserve's actions. Right now, the Federal Reserve is focused on dealing with high inflation by raising short-term interest rates.

However, our domestic economy doesn't exist in a vacuum and what's going on with the global global economy matters. Russia’s invasion of Ukraine turned out to be, “quite an inflationary event,” says Logan Mohtashami, lead analyst for HousingWire.

Supply chain issues have also been one of the main factors behind the current level of inflation. The latest COVID-19 lockdown in China threatens to add another disruption to the global supply chain. The impact of this hasn't hit the U.S. yet, but it adds a “secondary level of inflation,” Mohtashami says.

As much as these events are likely to add to inflation, they also inject uncertainty to the economic outlook. If rising rates and higher prices cause economic growth to slow, that would put pressure on rates to flatten out or drop. “It’s going to be a tug of war for the rest of the year,” Mohtashami says. For rates to go higher, or to stay here, the U.S. economy and economies around the world have to stay firm, he says.

Experts’ Advice for Homebuyers as Mortgage Rates Rise

If now is the right time for you to move or to become a homeowner, then current mortgage rates shouldn't stop you from making a move.

That said, today's housing market can be challenging (and expensive) for buyers. This makes it extra important to focus on the basics so you make the right long-term decision for you.

Stick to Your Budget

One challenge facing many homebuyers in today's market is affordability. Rising home values ​​coupled with the recent spike in interest rates have increased the importance of focusing on the fundamentals. “Make sure that … you’re really super focused on making sure that you don’t go above your budget, which can be challenging,” Hale says.

Experts recommend limiting your housing payment to 28% of your pre-tax income, although many mortgage programs will allow you to borrow much more.

Expand Your Search to Combat Low Inventory

“For a lot of people, the biggest obstacle is actually finding the right home rather than trying to figure out how to finance it,” says Hale.

Rising rates have also created a challenge for homeowners looking to buy or move. Spring is typically a time of year when we see more homes for sale. But this year we may not see as many homes going on the market as what was expected earlier in the year, Hale says.

That means you may need to have more patience when house shopping. To give yourself a better chance of finding the right home, write down what you must have in a home and what you are willing to compromise on. This can help expand your options while limiting rushing into a decision and then having buyer’s remorse.

Also, think about expanding your search to areas you did not initially consider. Real estate markets are local, which means you may have an easier time finding a suitable home in one area compared to another.

It remains to be seen how rising rates will affect the housing market. By not rushing into a home purchase you may eventually find yourself with less competition or with more homes to choose from. “Inventory levels got really, really bad in the early part of this year,” Mohtashami says. “There’s only one way to solve this … [with] higher rates, and hopefully it does its magic over the next few months.” As rates climb higher it could limit demand from buyers, which could improve housing inventory.

Have a Long-Term Timeline

Experts agree not to base essential life decisions, such as where to live and whether or not it's the right time for you to become a homeowner, on where the rates are. If you lock in a monthly payment you can afford and plan to live in the home for a longer period of time, you'll be better positioned to weather the ups and downs. Refinancing is always an option down the road if rates go down again.

“The housing market brings benefits to homeowners over a long period of time,” says McLaughlin. Home values ​​can go up or down in the short term, but over the long run they tend to rise, increasing an owner's equity. “It has shown to be a fairly investment, fairly stable, long term, especially compared to inflation,” he says.

Rates have risen a lot in the past few months, but if you look back, you'll see that they're not really high. Prior to the pandemic, higher interest rates were more common. Today's rates fall within a normal historical range.

Offset Rising Rates By Comparing Lenders

Mortgage rates and fees aren't static, they can vary widely from one lender to the next. This makes it important to compare offers from several mortgage lenders to find the best overall deal for you.

When you're ready to shop around, you'll need to submit a full application (with a credit check) to each lender. Just getting a mortgage preapproval with a ballpark quote won't definitely give you an accurate idea of what you'll pay. After you submit your application, you can get the information from the Loan Estimate each lender if required to send you and enter it in our loan comparison tool.

You can compare lender offers here using this Home Loan Comparison Tool. You can enter in the loan amount, rate, fees, and term for each offer and see a true side-by-side comparison of your potential monthly mortgage payment and how closing costs, lender fees, and interest rates play out over time with each loan offer.