The average 30-year fixed rate mortgage was 6.35% yesterday, a decrease of 0.08% since the day before. The 15-year fixed mortgage rate stood at 5.51%, down by 0.07%. The 30-year FHA mortgage averaged 5.68% yesterday, having dropped by 0.04. Meanwhile, the 30-year jumbo mortgage rate was 6.66%, reflecting a decrease of 0.06%.
The bigger picture
Mortgage rates fell moderately again yesterday as bond markets continued to be optimistic about an early settlement of the Middle East dispute. However, news broke yesterday evening, after most markets closed, that might or might not spoil that good mood.
"The U.S. and Iran opened fire in the Strait of Hormuz, with each side claiming the other initiated the attack," reported CNBC. A news release from U.S. Central Command said, "CENTCOM does not seek escalation but remains positioned and ready to protect American forces."
We'll have to wait to see how markets react today to new hostilities. They may shrug it off if there's no further escalation on either side, in which case this morning's jobs report may gain some prominence.
The monthly official jobs report rarely plays second fiddle to anything in bond markets' eyes. But, since Feb. 28, the Middle Eastern situation has tended to overshadow economic reports.
Scroll on down for details of today's economic reports and how they might affect mortgage rates.
Mortgage Rate Trends: Past 90 Days
Purchase Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.35% | 6.38% | -0.08% | -0.09% |
| 15-Year Fixed | 5.51% | 5.56% | -0.07% | -0.11% |
| 30-Year Fixed FHA | 5.68% | 6.89% | -0.04% | -0.09% |
| 30-Year Fixed VA | 5.78% | 5.93% | -0.05% | -0.11% |
| 30-Year Fixed USDA | 5.69% | 5.85% | -0.01% | -0.11% |
| 30-Year Fixed Jumbo | 6.66% | 6.67% | -0.06% | -0.17% |
| 5/6 Year ARM | 5.98% | 6.02% | +0.01% | -0.12% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.42% | 6.45% | -0.07% | -0.08% |
| 15-Year Fixed | 5.49% | 5.53% | -0.07% | -0.1% |
| 30-Year Fixed FHA | 5.68% | 6.89% | -0.04% | -0.06% |
| 30-Year Fixed VA | 5.79% | 5.94% | -0.05% | -0.08% |
| 5/6 Year ARM | 6.02% | 6.06% | -0.02% | -0.1% |
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.
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 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," says 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 in an e-newsletter:
"Employers likely added jobs at a moderate pace in April, holding the unemployment rate steady at a goldilocks level of 4.3%. Wage growth likely picked up in year-over-year terms, though not enough to offset higher inflation. It won’t be possible to judge that precisely until next week, when the April CPI report is published. Other labor market data scheduled for release this week are likely to be solid: Job openings likely ticked higher in the delayed March release, and the employment sub-index of the ISM Services PMI likely improved in April."
Comerica's predictions often differ from market expectations, which are a consensus of a wider pool of analysts.
Mortgage rates today
There are three economic reports on today's MarketWatch economic calendar. But the jobs report has by far the greatest potential to move mortgage rates.
Here are what markets are expecting from the headline figures in today's jobs report for April:
- Nonfarm payrolls (new jobs created during April) — Markets expect 55,000 new jobs, significantly lower than March's 178,000.
- Unemployment rate — Markets expect the rate to remain unchanged at 4.3%.
- Hourly wages — Markets expect wages to have increased by 0.3%, slightly faster than March's 0.2%.
- Year-over-year hourly wages — Markets expect wages to have increased by 3.8% year-over-year, faster than March's 3.5%.
Mortgage rates tend to fall when a report's actual figures are worse for the economy than expected, and to rise when they're better. When numbers are on or close to forecasts, those rates rarely move in response to the data.
Figures that are worse for the economy are usually lower-than-expected ones. But that's not always the case, and higher-than-expected numbers are good for mortgage rates when it comes to the unemployment rate and sometimes hourly wages, if the latter are regarded as unduly inflationary.
Today's other reports are:
- March wholesale inventories — Markets expect these to have risen by 1.4%, more quickly than February's 0.8%. But who cares?
- May consumer sentiment (preliminary reading) — Markets expect sentiment to inch lower to 49.7, compared with April's 49.8. Bond investors do care about consumer sentiment, but not normally as much as they worry about jobs.
Stand by for next Tuesday's consumer price index (CPI), an inflation report that sometimes rivals the jobs report as a driver of changes in mortgage rates.
