The average 30-year fixed rate mortgage was 6.75% yesterday, a decrease of 0.03% since the day before. The 15-year fixed mortgage rate stood at 5.73%, down by 0.05%. The 30-year FHA mortgage averaged 6.12% yesterday, having dropped by 0.03. Meanwhile, the 30-year jumbo mortgage rate was 7.02%, reflecting no change.
The bigger picture
Surprisingly, not much has changed for markets since we wrote yesterday about the U.S. military's involvement in the Israel vs. Iran Mideast conflict.
Andrew Brenner, head of international fixed income at NatAlliance Securities, got it right when he told Barron's on Sunday that he expected bond yields (and so mortgage rates) to fall. But the effect was barely perceptible.
Why is this surprising? Because yesterday Iran attacked a key U.S. base in Qatar.
Does that mean Iran is determined to seek revenge for America's offensive? Maybe.
However, early signals from the U.S. government suggested we would not respond to the Iranian attack. And Tehran said it gave us notice that its missiles were going to be incoming.
So, this may have been a choreographed dance in which America allowed Iran to save face with a pointless attack. And that gave all sides opportunities to exit the stage without further escalation.
That hypothesis was strengthened early yesterday evening when Reuters reported: "U.S. President Donald Trump said on Monday that a ceasefire has been agreed between Israel and Iran." Overnight, both parties independently verified their acceptance of the ceasefire, says The New York Times.
Markets will likely welcome that, moving on by refocusing on their other worries.
Other worries
Those other worries mainly center on two areas. First, the "One Big Beautiful Bill" (OBBB), which some fear will blow up federal (and maybe state) deficits. Certainly, one current version of the OBBB includes a provision to lift the debt limit by $5 trillion.
Some fiscal hawks in Congress are putting up resistance to the bill, and markets will be watching out for amendments. Meanwhile, Senate procedural rules are also hampering progress because they allow some OBBB proposals to pass only with a majority of 60 votes, a virtually impossible hurdle in the current Senate, says The Hill. Ultimately, any changes that reduce likely deficits will probably be good for mortgage rates.
And the second worry is the 90-day pause on tariffs, which is due to expire on July 9. Will the original hard line resume then, or might nearly all nations be offered much lower tariff rates than first outlined? We can expect hints in the next week or so.
Higher tariff rates might help mortgage rates fall because they increase the chances of a recession. However, they also make a spike in inflation more likely, and that would probably soon force mortgage rates higher again.
Mortgage Rate Trends: Past 90 Days
Purchase Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.75% | 6.78% | -0.03% | -0.19% |
| 15-Year Fixed | 5.73% | 5.77% | -0.05% | -0.24% |
| 30-Year Fixed FHA | 6.12% | 7.32% | -0.03% | -0.14% |
| 30-Year Fixed VA | 6.22% | 6.37% | -0.03% | -0.19% |
| 30-Year Fixed USDA | 6.09% | 6.23% | -0.14% | -0.13% |
| 30-Year Fixed Jumbo | 7.02% | 7.03% | +0% | -0.54% |
| 5/6 Year ARM | 6.75% | 6.79% | -0.12% | -0.1% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.78% | 6.81% | -0.07% | -0.22% |
| 15-Year Fixed | 5.73% | 5.77% | -0.04% | -0.21% |
| 30-Year Fixed FHA | 6.09% | 7.29% | -0.04% | -0.15% |
| 30-Year Fixed VA | 6.25% | 6.4% | -0.04% | -0.22% |
| 5/6 Year ARM | 6.89% | 6.92% | -0.01% | -0.04% |
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 tariffs and deficits are especially influential at the moment.
Here's Comerica Bank's expectations for economic reports scheduled for later this week:
"GDP growth in the first quarter will probably be revised down in the third estimate, incorporating revisions in last week’s retail sales report and a soft release of the Quarterly Services Survey. Household incomes likely rose solidly in May, while personal consumption expenditures probably pulled back. Total and core PCE inflation are expected to have edged up in May, leaving annual inflation little changed at a bit above the Fed’s target. ... house price increases likely slowed further in year-over-year terms in this week’s releases of April data."
Mortgage rates today
Today's MarketWatch economic calendar shows two economic reports due:
- S&P Case-Shiller home price index (20 cities) for April — Expected to show a year-over-year increase of 4.0%, slightly slower than March's 4.1%.
- June consumer confidence index — Expected to improve to 99.5, up from May's 98.0.
That consumer confidence index is the more likely to affect mortgage rates. However, markets have recently tended to shrug off economic reports as they focus on "other worries" (see above). So, don't be surprised if today's reports change little, regardless of their content.
Higher-than-expected numbers tend to push mortgage rates upward, while lower-than-expected ones tend to pull them downward.
Also today, Federal Reserve Chair Powell is scheduled to deliver his semiannual testimony to the House Financial Services Committee. He'll be back on Capitol Hill tomorrow for a similar grilling by a Senate committee.
Normally, we'd be a bit more excited by this because Powell is hugely influential in markets. But he delivered the Fed's current messages at a news conference only last Wednesday. And the chances of his having changed his mind so quickly seem remote.
