HousingToday

Mortgage And Refinance Rates, June 3

Today’s mortgage and refinance rates

Average mortgage rates fell modestly yesterday. That’s great. But the previous two days’ sharp rises mean the benefit of the most recent drop is limited.

Unfortunately, this morning, it was looking as if mortgage rates today might rise, perhaps appreciably. That’s likely down to the publication earlier of a better-than-expected jobs report. Of course, as always, things could change later in the day.

Current mortgage and refinance rates

Program Mortgage Rate APR* Change
Conventional 30 year fixed 5.399% 5.424% +0.1%
Conventional 15 year fixed 4.447% 4.477% -0.21%
Conventional 20 year fixed 5.271% 5.306% -0.19%
Conventional 10 year fixed 4.586% 4.651% -0.08%
30 year fixed FHA 5.423% 6.192% Unchanged
15 year fixed FHA 4.781% 5.232% -0.12%
30 year fixed VA 4.832% 5.048% -0.24%
15 year fixed VA 5.621% 5.974% +0.18%
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions here.

Should you lock a mortgage rate today?

Don’t lock on a day when mortgage rates look set to fall. My recommendations (below) are intended to give longer-term suggestions about the overall direction of those rates. So, they don’t change daily to reflect fleeting sentiments in volatile markets.

My message here remains the same. Don’t take too much notice of daily ups and downs in mortgage rates. There’s so much volatility in markets that these are to be expected and may not be meaningful within the bigger picture.

Once a clear trend emerges, we’ll see whether that’s an upward or downward one. I’m afraid I still think the former is more likely.

So, my personal rate lock recommendations for the longer term remain:

  • LOCK if closing in 7 days
  • LOCK if closing in 15 days
  • LOCK if closing in 30 days
  • LOCK if closing in 45 days
  • LOCK if closing in 60 days

>Related: 7 Tips to get the best refinance rate

Market data affecting today’s mortgage rates

Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:

  • The yield on 10-year Treasury notes climbed to 2.96% from 2.93%. (Bad for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields
  • Major stock indexes were lower soon after opening. (Good for mortgage rates.) When investors are buying shares, they’re often selling bonds, which pushes prices of those down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
  • Oil prices rose to $117.42 from $116.10 a barrel. (Bad for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
  • Gold prices decreased to $1,864 from $1,869 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold rises and worse when gold falls. Gold tends to rise when investors worry about the economy. And worried investors tend to push rates lower
  • CNN Business Fear & Greed index — inched up to 26 from 25 out of 100. (Bad for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are better than higher ones

*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.

Caveats about markets and rates

Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.

So use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today might rise. However, be aware that “intraday swings” (when rates change direction during the day) are a common feature right now.

Important notes on today’s mortgage rates

Here are some things you need to know:

  1. Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care
  2. Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
  3. Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
  4. When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
  5. Refinance rates are typically close to those for purchases.

A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.

Are mortgage and refinance rates rising or falling?

According to Freddie Mac’s weekly report yesterday, mortgage rates continued to “inch downward this week.” So, how come we and other sources are showing them higher than seven days earlier?

It’s because of the Freddie survey’s methodology. It tends to collect most of its data on the Monday before the Thursday report. And that means its numbers are usually out of date, at least when mortgage rates are volatile.

Freddie’s figures are great for tracking long-term trends. I use them all the time. But they can be misleading if you want to know what’s happening to mortgage rates each Thursday.

Today’s job numbers

This morning saw the publication of the official employment situation report for May. These are often the most important of all economic reports, though inflation figures can currently be even more influential.

Still, markets are moving this morning as a result of the new jobs data, which beat economists’ expectations. For example, nonfarm payrolls showed 390,000 new jobs in May, while the MarketWatch consensus forecast had been for 329,000.

Usually, better-than-expected numbers tend to push mortgage rates higher and worse ones lower. So this morning’s rising rates are a normal response. But investors will today be gauging the likely impact of the numbers on the Federal Reserve’s anti-inflationary plans. We’ll know more about how those Fed plans are evolving at a news conference on Jun. 15.

Don’t be surprised if markets later today change their minds about the report. Of course, they may not. But it sometimes takes them a while to digest new data.

Read the weekend edition of this daily article for more background.

Recent trends

Over much of 2020, the overall trend for mortgage rates was clearly downward. And a new, weekly all-time low was set on 16 occasions that year, according to Freddie Mac.

The most recent weekly record low occurred on Jan. 7, 2021, when it stood at 2.65% for 30-year fixed-rate mortgages.

Rates then bumbled along, moving little for the following eight or nine months. But they began rising noticeably that September. Unfortunately, they’ve been mostly shooting up since the start of 2022, although May was a kinder month.

Freddie’s June 2 report puts that same weekly average for 30-year, fixed-rate mortgages at 5.09% (with 0.8 fees and points), very slightly down from the previous week’s 5.1%.

Note that Freddie expects you to buy discount points (“with 0.8 fees and points”) on closing that earn you a lower rate. If you don’t do that, your rate would be closer to the ones we and others quote.

Expert mortgage rate forecasts

Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.

And here are their current rate forecasts for the remaining three quarters of 2022 (Q2/22, Q3/22, Q4/22) and the first quarter of next year (Q1/23).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were published on May 19, and the MBA’s on May 16. Freddie’s were released on Apr. 18. But it now updates its figures only quarterly so they’re already looking stale.

Forecaster Q2/22 Q3/22 Q4/22 Q1/23
Fannie Mae 5.1% 5.1%  5.1% 5.1%
Freddie Mac 4.8% 4.8%  5.0% 5.0%
MBA 5.2% 5.1%  5.0% 5.0%

Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual.

Find your lowest rate today

You should comparison shop widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:

“Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan.”

Mortgage rate methodology

The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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