The average 30-year fixed rate mortgage was 6.55% yesterday, unchanged since the day before. The 15-year fixed mortgage rate stood at 5.72%, the same as one the day before. The 30-year FHA mortgage averaged 5.92% yesterday, having stayed the same. Meanwhile, the 30-year jumbo mortgage rate was 6.68%, reflecting no change.
The bigger picture
On every day last week, mortgage rates either fell or held steady on hopes that the U.S. and Iran would move closer to peace. Yesterday evening, President Donald J. Trump posted on social media: "The Deal with the Islamic Republic of Iran is now complete. Congratulations to all!
The deal is yet to be signed, but multiple sources reported that the agreement was complete. For now, its contents have not been released.
But it's widely reported that the Strait of Hormuz will quickly reopen, allowing oil tankers and other ships trapped since Feb. 28 to freely make their way to their destinations. We hope, absent new issues, that mortgage rates will move lower — maybe appreciably lower — on the news.
It's too soon for anyone to celebrate too wildly. The deal is actually a memorandum of understanding that allows a new round of peace talks to begin. So, it's not an end to the conflict.
And we're yet to see any political fallout it creates in Washington, D.C., and Tehran. Still, oil prices were falling sharply yesterday evening, which is a very good early sign.
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 | 6.55% | 6.59% | +0% | -0.06% |
| 15-Year Fixed | 5.72% | 5.78% | +0% | -0.06% |
| 30-Year Fixed FHA | 5.92% | 7.13% | +0% | -0.03% |
| 30-Year Fixed VA | 6.07% | 6.23% | +0% | -0.02% |
| 30-Year Fixed USDA | 6% | 6.16% | +0% | -0.01% |
| 30-Year Fixed Jumbo | 6.68% | 6.7% | +0% | -0.11% |
| 5/6 Year ARM | 6.1% | 6.16% | +0% | -0.1% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.59% | 6.62% | +0% | -0.08% |
| 15-Year Fixed | 5.69% | 5.75% | +0% | -0.06% |
| 30-Year Fixed FHA | 5.92% | 7.13% | +0% | -0.03% |
| 30-Year Fixed VA | 6.08% | 6.23% | +0% | -0.01% |
| 5/6 Year ARM | 6.17% | 6.22% | +0% | -0.22% |
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 and producer price index, published on Jun. 10 and 11, respectively, were 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.
The next meeting of the Fed's rate-setting body is scheduled for Tuesday and Wednesday of this week. But the CME FedWatch tool puts the chances of general interest rates remaining unchanged at 98.5%.
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."
Mortgage rates today
There are four economic reports on today's MarketWatch economic calendar. But yesterday's big news concerning the Middle East is likely to overshadow them all.
Here are what markets are expecting from each of this morning's four reports:
- June Empire State manufacturing survey — Markets expect this to fall to 13.9 from 19.6 in May
- May industrial production — Markets expect this to increase more slowly than in April: by 0.3% compared with 0.7%
- May capacity utilization — Markets expect this to stand at 76.2% in May, slightly better than April's 76.1%
- June National Association of Home Builders housing market index — Markets expect this to hold steady in June at 37, unchanged since May
Typically, worse-than-expected numbers in a report are better for mortgage rates, while better-than-expected ones tend to push those rates higher, all other things being equal. When numbers come in as expected, mortgage rates rarely move far.
This week's star report reveals retail sales in May and is scheduled for Wednesday. We're due the Fed's rate announcement the same day.
