Today’s mortgage and refinance rates
Average mortgage rates barely inched higher yesterday. But, over this week, they’ve moved up appreciably.
My apologies for again failing to provide a forecast for those rates next week. Markets are still blindly stumbling around with no apparent underlying direction. And the chances of their rising or falling over the next seven days are roughly equal.
Current mortgage and refinance rates
|Conventional 30 year fixed||5.445%||5.47%||+0.05%|
|Conventional 15 year fixed||4.541%||4.572%||+0.09%|
|Conventional 20 year fixed||5.344%||5.379%||+0.07%|
|Conventional 10 year fixed||4.666%||4.732%||+0.08%|
|30 year fixed FHA||5.341%||6.16%||-0.03%|
|15 year fixed FHA||4.787%||5.239%||+0.01%|
|30 year fixed VA||4.838%||5.054%||+0.01%|
|15 year fixed VA||5.522%||5.874%||-0.1%|
|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.
Markets continue to show unusual volatility. We had three weeks in May when mortgage rates fell more than they rose, based on Mortgage News Daily’s data. But last week wiped out most of those gains. And there have been only two days since May 9 when they were higher than they were last evening.
It won’t be clear for some time whether last week was an anomaly in a new downward trend. Or whether the previous three weeks were an anomaly in the monthslong upward trend. I’d put my money on the latter if I had to wager. But nobody can be sure.
Part of the reason I’m still suggesting locking your rate soon is that I’m naturally cautious. But I also bear in mind that “losses loom larger than gains” in most people’s minds.
And so, my personal rate lock recommendations 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
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your personal tolerance for risk help guide you.
What’s moving current mortgage rates
The same hopes and fears have been occupying bond markets’ minds for weeks and months. The fears largely concern continuing hot inflation, and the possibility that the Federal Reserve’s anti-inflationary plans might tip the economy into recession. The hopes are that investors have already adequately anticipated those events and have priced them into bond prices at an appropriate level.
Of course, nobody can be sure what’s going to happen. And news that affects their likelihood can be read in at least two ways.
For example, yesterday’s better-than-expected job numbers suggest we’re nowhere near a recession yet. But the same figures suggest the Fed might act even more aggressively over inflation, increasing the likelihood of such a recession.
So, yesterday, mortgage rates moved decisively higher in the morning, celebrating the good economic news. But they fell back later in the day as investors considered how that news might affect the Fed’s plans. They ended up only a tiny bit higher. Yesterday morning, I warned of precisely that possibility.
And now you know why mortgage rates and markets are so volatile and unpredictable. Investors are playing a fiendishly complicated game akin to three-dimensional chess. But that’s made even more difficult by the high volume of unknown variables speeding toward them down the road.
Unsurprisingly, all this makes investors skittish. And, absent any real certainty, they’re now much more susceptible than usual to rumors and mood swings.
What’s next for mortgage rates?
Clearly, nobody knows what’s coming. But I and many other observers of mortgage rates are concerned that we haven’t seen the last of high inflation. Russia’s invasion of Ukraine continues to cause havoc with many commodity prices and supply chains.
Meanwhile, rapidly rising prices plus yesterday’s good employment report could encourage the Fed to act even more aggressively to counter inflation than it’s so far indicated. And that makes the chances of a recession even greater. We’ll learn more about the Fed’s plans at a news conference on Jun. 15.
We may see mortgage rates move decisively higher soon, if I’m right. But, as I said last week, let’s hope I’m wrong.
Economic reports next week
With one crucial exception, next week is an unusually quiet one for economic reports. That exception is the consumer price index (CPI), which is due out on Friday morning. Of course, this is a measure of inflation, which is the current obsession of markets.
The potentially most important reports, below, are set in bold. The others are unlikely to move markets much unless they contain shockingly good or bad data.
- Thursday — Weekly new claims for unemployment insurance to Jun. 4
- Friday — May consumer price index, including core CPI. Plus June consumer sentiment index
Watch out for Friday!
Mortgage interest rates forecast for next week
I may think mortgage rates will probably move higher again sometime soon. But I’ve no idea whether that will start next week. So, once again, I’m copping out of predicting where they’ll head over the next seven days.
Mortgage and refinance rates usually move in tandem. And the scrapping of the adverse market refinance fee last year has largely eliminated a gap that had grown between the two.
Meanwhile, another recent regulatory change has likely made mortgages for investment properties and vacation homes more accessible and less costly.
How your mortgage interest rate is determined
Mortgage and refinance rates are generally determined by prices in a secondary market (similar to the stock or bond markets) where mortgage-backed securities are traded.
And that’s highly dependent on the economy. So mortgage rates tend to be high when things are going well and low when the economy’s in trouble.
But you play a big part in determining your own mortgage rate in five ways. And you can affect it significantly by:
- Shopping around for your best mortgage rate — They vary widely from lender to lender
- Boosting your credit score — Even a small bump can make a big difference to your rate and payments
- Saving the biggest down payment you can — Lenders like you to have real skin in this game
- Keeping your other borrowing modest — The lower your other monthly commitments, the bigger the mortgage you can afford
- Choosing your mortgage carefully — Are you better off with a conventional, conforming, FHA, VA, USDA, jumbo or another loan?
Time spent getting these ducks in a row can see you winning lower rates.
Remember, they’re not just a mortgage rate
Be sure to count all your forthcoming homeownership costs when you’re working out how big a mortgage you can afford. So focus on your “PITI.” That’s your Principal (pays down the amount you borrowed), Interest (the price of borrowing), (property) Taxes, and (homeowners) Insurance. Our mortgage calculator can help with these.
Depending on your type of mortgage and the size of your down payment, you may have to pay mortgage insurance, too. And that can easily run into three figures every month.
But there are other potential costs. So you’ll have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repairs and maintenance costs. There’s no landlord to call when things go wrong!
Finally, you’ll find it hard to forget closing costs. You can see those reflected in the annual percentage rate (APR) that lenders will quote you. Because that effectively spreads them out over your loan’s term, making that higher than your straight mortgage rate.
But you may be able to get help with those closing costs and your down payment, especially if you’re a first-time buyer. Read:
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 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.