The average 30-year fixed rate mortgage was 6.6% yesterday, a decrease of 0.01% since the day before. The 15-year fixed mortgage rate stood at 5.78%, down by 0.03%. The 30-year FHA mortgage averaged 5.97% yesterday, having risen by 0.02. Meanwhile, the 30-year jumbo mortgage rate was 6.69%, reflecting an increase of 0.04%.
The bigger picture
Yesterday evening, Fox News said the "Iran war has re-ignited" as the two sides exchanged air strikes. So, why did mortgage rates inch lower on Thursday, chasing oil prices?
We're not the only ones who are mystified. "Looking at the volatility in the oil market, I’m left wondering why the smart money failed to hedge against what was always a highly probable breakdown of this fragile cease-fire between the U.S. and Iran," wrote Andrew Ross Sorkin in his daily DealBook e-newsletter for The New York Times.
"The interim peace deal was clearly resting on a knife’s edge, yet investors chose the comfort of short-term optimism over geopolitical probability. Again," Sorkin continued.
It seems that optimism hasn't yet gone away. But don't bank on it lasting.👉Stay ahead of the market. Subscribe to the Mortgage Research Network Podcast
Mortgage Rate Trends: Past 90 Days
Purchase Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.6% | 6.64% | -0.01% | +0.03% |
| 15-Year Fixed | 5.78% | 5.84% | -0.03% | +0.02% |
| 30-Year Fixed FHA | 5.97% | 7.18% | +0.02% | +0% |
| 30-Year Fixed VA | 6.08% | 6.24% | +0.01% | +-0% |
| 30-Year Fixed USDA | 5.99% | 6.15% | -0.04% | -0.02% |
| 30-Year Fixed Jumbo | 6.69% | 6.71% | +0.04% | -0.12% |
| 5/6 Year ARM | 6.22% | 6.3% | +0.01% | +0.04% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.65% | 6.69% | -0.02% | +0.02% |
| 15-Year Fixed | 5.75% | 5.81% | -0.03% | +0.01% |
| 30-Year Fixed FHA | 5.96% | 7.17% | +0.01% | +0% |
| 30-Year Fixed VA | 6.07% | 6.16% | -0.01% | -0.02% |
| 5/6 Year ARM | 6.44% | 6.52% | +0.24% | +0.03% |
What's coming up?
Although economic reports are usually the main drivers of changes to mortgage rates, they're not the only ones. The general mood in markets and economically consequential news can also affect those rates. News items concerning the war, employment, inflation, tariffs, and deficit funding are especially influential at the moment.
The Fed
May's price indices (the CPI, PPI, IPI and PCE) tend to lend weight to pessimistic arguments about future inflation rates. And those reports landed either side of the last meeting of the Federal Reserve's rate-setting committee on Jun. 16-17.
The minutes of that meeting were released on July 7, and Barron's reported that day:
"The minutes from Kevin Warsh’s [the new Fed chair's] first Federal Reserve policy meeting contained few surprises, but underscored how divided policymakers remained over the path of interest rates. That could be a sign the Fed will stay on hold for longer."
"Nine policymakers penciled in at least one rate hike by the end of the year, according to the Summary of Economic Projections released in June, continued Barron's. "Eight officials expected no changes to the benchmark rate, while only one official believed the committee would implement a rate cut by the end of the year. Warsh declined to provide projections."
The minutes themselves revealed: "Most participants remarked on scenarios in which inflationary pressures would dissipate and inflation would soon begin to return to 2 percent. In such scenarios, almost all of these participants noted that it would likely be appropriate to maintain or eventually lower the target range for the federal funds rate. Most participants, however, also pointed to scenarios in which, in the context of stable labor market conditions, inflation would remain elevated due to strong AI-related demand, the conflict in the Middle East, or the effects of tariffs. In such scenarios, almost all of these participants indicated that some policy
firming would likely be warranted to return inflation to 2 percent."
In this context, "policy firming" very likely means one or more hikes in general interest rates.
The Fed doesn't directly set new fixed-rate mortgage rates. But the factors that influence its decisions (and to a lesser extent the decisions themselves) certainly do move those rates.
Bond markets vs. stock markets
Mortgage rates are largely dictated by the yields on a type of bond, the mortgage-backed security (MBS). So, we focus on bond markets.
On May 7, The New York Times explored why stock markets and bond markets have been behaving so differently from each other since the start of the conflict in the Middle East.
Investors in stocks have been wagering that U.S. companies will continue to generate large profits during the conflict. And the stock market typically cares only about whether dividends and company values will continue to rise.
"But the bond market is another matter," said The Times. "Bond traders have maintained a much sharper focus on risk. Yields remain correlated with shifts in the price of oil. As oil prices have spiked and inflation has risen, yields have risen and bond prices, which move in the opposite direction, have fallen."
Mortgage rates today
There are no economic reports on today's MarketWatch economic calendar.
What's next?
Strap in for next Tuesday's consumer price index (CPI) for June. After that, we're due June retail sales data on Thursday and a preliminary reading of July's consumer sentiment index on Friday.
Events in the Middle East over the last few days might push mortgage rates appreciably higher if the renewed conflict is not swiftly resolved. That's because a prolonged closure of the Strait of Hormuz could again choke off 20% of the world's oil supply, putting additional pressure on gas (and many other) prices.
