The average 30-year fixed rate mortgage is 6.57% today, unchanged since yesterday. The 15-year fixed mortgage rate stands at 5.74%, the same as one day ago. The 30-year FHA mortgage now averages 5.96%, having risen by 0.03. Meanwhile, the 30-year jumbo mortgage rate is 6.75%, reflecting a decrease of 0.04%.
The bigger picture
Mortgage rates barely moved yesterday, despite the consumer price index (CPI) showing prices rising 4.2% year over year in May. That's because the bond market that determines mortgage rates trades ahead of actual data based on market expectations, and markets expected precisely 4.2%.
Today's producer price index (PPI) is typically much less influential than the CPI. So, it's likely to affect mortgage rates significantly only if it comes in with some shocking numbers.
Even then, it may struggle to attract investors' attention because that has shifted back onto the Middle East. The mood in Washington, D.C. has grown increasingly bellicose in recent days, and a fresh wave of strikes was launched against Iran yesterday evening, the second in two days. Oil prices were rising last night, something that's generally bad for mortgage rates.
Scroll on down for details of today's economic reports and how they might affect mortgage rates.
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Mortgage Rate Trends: Past 90 Days
Purchase Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.57% | 6.6% | +0% | +0.11% |
| 15-Year Fixed | 5.74% | 5.8% | +0% | +0.13% |
| 30-Year Fixed FHA | 5.96% | 7.17% | +0.03% | +0.17% |
| 30-Year Fixed VA | 6.07% | 6.23% | +-0% | +0.16% |
| 30-Year Fixed USDA | 6.04% | 6.2% | +0.04% | +0.15% |
| 30-Year Fixed Jumbo | 6.75% | 6.77% | -0.04% | +0% |
| 5/6 Year ARM | 6.14% | 6.2% | +0.01% | +0.08% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.62% | 6.65% | +-0% | +0.09% |
| 15-Year Fixed | 5.73% | 5.78% | +0% | +0.13% |
| 30-Year Fixed FHA | 5.96% | 7.17% | +0.03% | +0.17% |
| 30-Year Fixed VA | 6.08% | 6.23% | +-0% | +0.15% |
| 5/6 Year ARM | 6.41% | 6.46% | +0.17% | +0.25% |
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
April's price indices (the CPI, PPI, IPI and PCE) tend to lend weight to pessimistic arguments about future inflation rates. May's consumer price index was even worse than April's.
Those reports landed well after the last meeting of the Federal Reserve's rate-setting committee. Minutes of that meeting were published on May 20 and included the following:
"Almost all participants noted that there was a risk that the conflict in the Middle East could persist for an extended period or that, even after the conflict ended, the prices of oil and other commodities could remain elevated for longer than expected. In such scenarios, these participants expected continued upward pressure on inflation arising from supply chain disruptions, high energy prices, or the pass-through of higher input costs to other prices. The vast majority of participants noted an increased risk that inflation would take longer to return to the Committee’s 2 percent objective than they had previously expected."
Bottom line: "A majority of participants highlighted ... that some policy firming would likely become appropriate if inflation were to continue to run persistently above 2 percent." Policy firming is Fedspeak for a rate hike.
Bond markets vs. stock markets
Mortgage rates are largely dictated by 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."
Comerica Bank's weekly preview
On Monday, Comerica Bank published its weekly preview:
"Headline CPI is expected to top 4% year-over-year in the May release, reaching a three-year high on last month’s rise in gasoline prices. Core CPI should run cooler, near 3% year-over-year. Prices rose faster than average hourly earnings in May, eroding consumers’ purchasing power. The PPI likewise registered another outsize increase and outpaced the CPI, reflecting the larger shares of petroleum products, metals, and shipping costs in the producer price basket.
"Consumer inflation expectations are likely to tick higher in the New York Fed’s May survey, weighing on views of the economy and job market. But the University of Michigan’s more timely read on consumer sentiment for early June will likely edge up from May’s record low, helped by lower gasoline prices over the last two weeks and higher stock prices."
Comerica's predictions often differ from market expectations, which are a consensus of a wider pool of analysts' forecasts.
Mortgage rates today
There are two economic reports on today's MarketWatch economic calendar. However, this morning's May producer price index (PPI) is potentially by far the more important.
Right now, markets generally (and the MBS one that determines mortgage rates in particular) are highly sensitive to inflation data. And a wide gap between the figures published this morning and the ones expected by markets could generate real volatility.
Like all price indices, the PPI has four headline figures. However, MarketWatch is now publishing market expectations for only two of them.
They both measure price changes only in the reporting month, which in this case is May.
One measures all price changes included in the PPI survey, and the other tracks the same, but excluding food and energy prices. The latter is called "core" PPI, and is likely to be lower than the vanilla PPI numbers because much recent inflation has been driven by higher gas (aka energy) prices.
Here are market expectations for this morning's two headline figures:
- May PPI — Markets expect wholesale prices to have risen by 0.7%, half that of April's 1.4%
- May core PPI — Markets expect core wholesale prices to have risen by 0.5%, again half that in April
With inflation data, lower-than-expected numbers are pretty much always better for mortgage rates than higher-than-expected ones, all other things being equal. When numbers come in as expected, mortgage rates rarely move far.
Today's other economic report is the weekly tally of initial jobless claims during the week ending Jun. 6. Markets expect that to be 220,000, a little better than the previous week's number of 225,000.
The consumer sentiment index from the University of Michigan is the lone economic report scheduled for tomorrow.
