CHART: 7% Mortgage Rates Are Middle of Range In Post-Pandemic Cycle 2023-2025

Mortgage rates are back up to 7% ahead of Memorial Day, and Matt Graham at Mortgage News Daily (MND) reminds us that this is “middle of the road” from 2023 to present.

Matt drew red lines on the MND chart (above) of 30-year fixed rates to show the 6% to 8% rate trend since 2023. I added diagrams to his chart to specify 4 key rate inflection points of the 2021 to 2025 era:

1. Pandemic-era mortgage rate low of 2.75% on January 25, 2021.

2. Post-pandemic mortgage rate high of 8% on October 19, 2023.

3. Pre-election mortgage rate low of 6.125% on September 16, 2024.

4. Current mortgage rate of 7% as of May 23, 2025.

Matt also points out how 1 or more of the following things needs to happen for rates to improve:

1. A sharp and sustained decline in inflation.

2. A sharp and sustained downturn in economic activity.

3. A sincere, bipartisan effort to reduce the deficit.

Regarding inflation declines, Core CPI inflation is 2.8%, and Core PCE (which the Fed and therefore bond/rate markets prefer) is 2.6%.

Core PCE of 2.6% is pretty low, especially compared to its peak of 5.2% in March 2022, and approaching the Fed’s target of 2%.

But the trade war may cause Core PCE to rise again, and we’ll get the latest update this coming Friday, May 30.

As for whether we get a “sharp and sustained” downturn in U.S. economic activity, 1Q 2025 GDP declined 0.3%, which is a reasonably sharp decline from 2.4% GDP in 4Q 2024.

Fed chief Jay Powell told reporters after the May 7 FOMC meeting this GDP decline reflected “swings in net exports that were likely driven by businesses bringing in imports ahead of potential tariffs.”

The -0.3% GDP for 1Q 2025 was the first of 3 readings for 1Q 2025, and the second estimate comes out next Thursday, May 29.

And as for whether we get a “sincere, bipartisan effort to reduce the deficit,” I refer you to Matt’s post linked below, where he explains how bond/rate markets have been reacting to the fiscal show in Washington.

Please reach out with questions.

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Reference:

– Rates Back to 7%. What Will It Take For Them to Drop? (MND)