Today’s Mortgage and Refinance Rates
Average mortgage rates barely budged yesterday. However, overall, the week was favorable for these rates. Don’t get too excited. They didn’t fall far. But at least they’re finally heading in the right direction for now.
I’m still not comfortable predicting where mortgage rates will move next week. There is too much uncertainty and volatility for me to do more than hazard a guess. They could really go either way.
But they’re not going anywhere on Monday. Because it’s Memorial Day and the markets are closed. So we will be back on Tuesday morning.
Current mortgage and refinance rates
|Program||Mortgage rate||APR*||To change|
|30-year fixed conventional||5.217%||5.241%||+0.01%|
|15-year fixed conventional||4.391%||4.421%||+0.04%|
|20-year fixed conventional||5.267%||5.304%||+0.02%|
|10-year fixed conventional||4.469%||4.53%||+0.04%|
|30-year fixed FHA||5.39%||6.159%||+0.01%|
|15-year fixed FHA||4.583%||5.005%||+0.08%|
|30-year fixed PV||4.877%||5.093%||+0.01%|
|15-year fixed VA||4.625%||4.968%||-0.01%|
|Pricing is provided by our partner network and may not reflect the market. Your rate may be different. Click here for a personalized quote. See our rate assumptions here.|
Should you lock in a mortgage rate today?
Don’t lock in on a day when mortgage rates look set to drop. My recommendations (below) are intended to provide longer-term suggestions on the general direction of these rates. Thus, they do not change daily to reflect fleeting sentiments in volatile markets.
Nothing has changed since last week. And mortgage rates remain totally unpredictable. Indeed, the markets have generally oscillated wildly, alternating periods of falling and periods of soaring.
Part of the reason I always suggest locking in your rate soon is that I’m naturally cautious. But I also keep in mind that “the losses are greater than the gains“in most people’s minds.
And so, my personal rate lock recommendations remain:
- TO BLOCK if closing seven days
- TO BLOCK if closing 15 days
- TO BLOCK if closing 30 days
- TO BLOCK if closing 45 days
- TO BLOCK if closing 60 days
However, with so much uncertainty right now, your instincts could easily turn out to be as good as mine, or even better. So let your instincts and personal risk tolerance guide you.
What’s Moving Current Mortgage Rates
Last week I quoted The Wall Street Journal (paywall) on stock indices last Friday. It had reported: “The Dow Jones industrialists recorded their eighth straight weekly loss, their longest such streak since 1932, near the peak of the Great Depression.”
This week I will quote the same source yesterday on stock market indices. He said: “The S&P 500 ran higher on Friday, notching its best week of the year and snapping a punishing losing streak that had nearly ended its bull market.”
And it wasn’t just the S&P 500. The Nasdaq composite did even better. And Dow Industrials also rose, albeit more modestly.
The Journal goes on to say:
For months, concerns about high inflation and the path of Federal Reserve rate hikes have weighed on the market. Investors fear that interest rate hikes will tip the economy into a slowdown. … Fears of such a doomsday scenario seem to have faded this week.
Of course, the relationship between bond markets and the stock market is imperfect. Yet, if this newfound optimism takes hold in the mortgage-backed securities market (the bond market that largely determines mortgage rates), we could see mortgage rates continue to fall.
The two main drivers of rising rates this year have been runaway inflation and concerns that Fed rate hikes will lead to a recession or even “stagflation” (stagnant growth with high inflation). So the perception that these threats have diminished could be good news for these rates.
Doubts and suspicions
But I still have nagging doubts. Yes, this week’s PCE inflation report suggests prices may have peaked in April. But one month’s data cannot be considered definitive. And Russia’s invasion of Ukraine continues. This has been a major contributor to inflation over the past three months. We are not yet out of these woods.
Meanwhile, the Fed remains committed to raising rates enough to keep inflation under control, regardless of the impact of its actions on growth. We already know that three major rate hikes (0.5%) are likely in June, July and September.
And we’ve seen over the past two weeks how quickly market moods can change. And I suspect that this week’s sunny optimism may not last long enough to lead to significant and sustained declines in mortgage rates.
But let’s hope I’m wrong. It would not be the first time.
Economic reports next week
We expect the official May employment report on Friday. It’s still important, though perhaps less so now that the markets are so obsessed with inflation. Economists polled by MarketWatch expect fewer new jobs in this report than in the previous one. But, given the current high employment rates, that probably won’t bother the markets too much.
The potentially most important reports below are highlighted in bold. The others are unlikely to move the markets much unless they contain surprisingly good or bad data.
- Monday – Remembrance Day. Markets closed and no report
- Tuesday – March house price indices from S&P Case-Shiller and the Federal Housing Finance Agency. Plus the May Consumer Confidence Index
- Wednesday — April BLOWS (Job vacancies and labor turnover survey). Additionally, the May manufacturing indices from S&P Global and the Institute for Supply Management (ISM)
- Thursday — May ADP employment report on private sector jobs. Additionally, weekly new claims for unemployment insurance through May 28
- Friday — May job status report, including nonfarm payrolls, unemployment rate, and average hourly earnings. Plus May indices for the services sector from S&P Global and the ISM
This week, it’s all about Friday.
Mortgage interest rate forecast for next week
For the second week in a row, I’m avoiding making a prediction on mortgage rates next week. There is too little certainty and too much volatility for me to even make an educated guess.
Mortgage and refinance rates generally move in tandem. And the removal of unfavorable market refinancing charges last year has largely eliminated the 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 expensive.
How your mortgage interest rate is determined
Mortgage and refinance rates are typically determined by prices in a secondary market (similar to stock or bond markets) where mortgage-backed securities are traded.
And it depends heavily on the economy. Thus, mortgage rates tend to be high when things are going well and low when the economy is struggling.
But you play an important role in determining your own mortgage rate in five ways. And you can affect it significantly by:
- Shop around for your best mortgage rate – They vary widely from lender to lender
- Boost your credit score – Even a small bump can make a big difference to your rate and payments
- Save the biggest down payment possible – Lenders like you to have real skin in this game
- Keep your other borrowings small — The lower your other monthly commitments, the higher the mortgage you can afford
- Choose your mortgage carefully – Are you better off with a conventional, conforming, FHA, VA, USDA, jumbo or other loan?
Time spent getting these ducks in a row can earn you lower rates.
Remember it’s not just a mortgage rate
Be sure to factor in all of your homeownership costs when calculating how much mortgage you can afford. So focus on your “PITI”. It’s your Pprincipal (repays the amount you borrowed), IInterest (the price of the loan), (the property) Jaxes, and (owners) Iinsurance. Our mortgage loan calculator can help you.
Depending on your type of mortgage and the amount of your down payment, you may also need to pay for mortgage insurance. And that can easily hit three figures every month.
But there are other potential costs. So you will have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repair and maintenance costs. There is no owner to call when things go wrong!
Finally, you will have a hard time forgetting closing costs. You can see those reflected in the annual percentage rate (APR) that lenders will quote you. Because it spreads them effectively over the term of your loan, making it higher than your normal mortgage rate.
But you may be able to get help with those closing costs. and your down payment, especially if you are a first-time buyer. Lily:
Down payment assistance programs in every state for 2021
Mortgage Rate Methodology
Mortgage reports receive daily rates based on selected criteria from multiple lending partners. We arrive at an average rate and APR for each loan type to display in our chart. Because we average a range of prices, it gives you a better idea of what you might find in the market. In addition, we average the rates for the same loan types. For example, fixed FHA with fixed FHA. The result is a good overview of the daily rates and their development over time.
The information contained on The Mortgage Reports website is provided for informational purposes only and does not constitute advertising 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 company or affiliates.