The average 30-year fixed rate mortgage was 6.48% yesterday, unchanged since the day before. The 15-year fixed mortgage rate stood at 5.69%, the same as one the day before. The 30-year FHA mortgage averaged 5.86% yesterday, having stayed the same. Meanwhile, the 30-year jumbo mortgage rate was 6.65%, reflecting no change.
The bigger picture
Mortgage rates feel every bump in the road to peace in the Middle East. And we've had plenty of smooth bits and potholes since bond markets (one of which dictates mortgage rates) last opened on Thursday.
On Saturday, Vice President J.D. Vance joined the American negotiating team in Bürgenstock, Switzerland. And on Sunday, the U.S. began a session of multilateral talks with Iran and other nations with moderating roles.
However, those talks were put on pause at around lunchtime yesterday. They were already at risk following the continuing conflict between Hezbollah and Israel in Lebanon.
But on Sunday morning, Fox News reported that President Donald Trump had issued threats to Iran, saying, "You close it [the Strait of Hormuz] and you won't have a country." The memorandum of understanding signed by the two nations last week specifically requires the parties to both facilitate a ceasefire in Lebanon and to refrain from threatening each other.
"In a statement early Monday, Qatar and Pakistan [the lead mediators] said a line of communication between Iran and the U.S. had been formed to avoid incidents and enable safe passage for commercial vessels through the Strait of Hormuz," reported The Wall Street Journal. That may provide some relief for markets this morning and for as long as it holds.
However, expect volatility in mortgage rates throughout the peace process.
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Mortgage Rate Trends: Past 90 Days
Purchase Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.48% | 6.52% | +0% | -0.15% |
| 15-Year Fixed | 5.69% | 5.75% | +0% | -0.08% |
| 30-Year Fixed FHA | 5.86% | 7.07% | +0% | -0.13% |
| 30-Year Fixed VA | 6.01% | 6.17% | +0% | -0.1% |
| 30-Year Fixed USDA | 5.93% | 6.09% | +0% | -0.13% |
| 30-Year Fixed Jumbo | 6.65% | 6.67% | +0% | -0.24% |
| 5/6 Year ARM | 6.19% | 6.25% | +0% | +0.1% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.54% | 6.57% | +0% | -0.16% |
| 15-Year Fixed | 5.66% | 5.72% | +0% | -0.09% |
| 30-Year Fixed FHA | 5.86% | 7.07% | +0% | -0.12% |
| 30-Year Fixed VA | 6.01% | 6.1% | +0% | -0.1% |
| 5/6 Year ARM | 6.31% | 6.37% | +0% | +0.15% |
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. Meanwhile, May's import price index, released Jun. 16, came in worse than markets were expecting.
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.
We should get the minutes of the Jun. 17 meeting roughly three weeks from that date. But events surrounding that showed committee members all but ruling out a further cut to general interest rates this year. And almost half of them now expect a hike in 2026.
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 and bond markets have behaved so differently 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 Thursday. That's when the Fed's preferred gauge of inflation is due. The personal consumption expenditures (PCE) price index for May will provide the most authoritative guide to price changes that month.
Also that day, we're due the third and final reading of gross domestic product (GDP) during the first quarter.
