The average 30-year fixed rate mortgage is 6.91% today, a decrease of 0.02% since yesterday. The 15-year fixed mortgage rate stands at 5.96%, down by 0.02%. The 30-year FHA mortgage now averages 6.24%, having dropped by 0.02. Meanwhile, the 30-year jumbo mortgage rate is 7.55%, reflecting a decrease of 0.01%.
The bigger picture
Mortgage rates are largely determined by the yield on a type of bond, the mortgage-backed security. So, any headline that speaks of rising bond yields is worrying.
And there were plenty such headlines yesterday. Sure enough, mortgage rates climbed. True, they recovered somewhat during the afternoon. But they're now dangerously close to the 7% mark, according to Mortgage News Daily's reckoning, for the most common types of mortgage.
America loses its last perfect credit rating
As we said that morning, the cause was the stripping by Moody's Ratings after markets closed on Friday of the U.S. government's final perfect credit rating.
In a press release, Moody's was explicit about its reasons: "Over the next decade, we expect larger deficits as entitlement spending rises while government revenue remains broadly flat. In turn, persistent, large fiscal deficits will drive the government's debt and interest burden higher. The US' fiscal performance is likely to deteriorate relative to its own past and compared to other highly-rated sovereigns."
More debt woes?
Meanwhile, on Capitol Hill, the One Big Beautiful tax and spending bill continues to make its way through the legislative process. And yesterday, The Wall Street Journal suggested that it would add to debt and deficit woes.
"The plan won’t reduce federal budget deficits and would make America’s fiscal hole deeper," said the Journal. "The current proposal would increase projected budget deficits by nearly $3 trillion through 2034, locking in tax cuts and spending increases that outweigh reductions in spending on Medicaid and nutrition assistance. ... Budget analysts across the political spectrum have panned the ... plan, warning that it worsens the U.S. fiscal picture."
Foreigners snub U.S. debt
We will have to wait to see how bond markets react if the bill passes into law in its current form. But data suggest some foreigners are already avoiding buying U.S. government debt in the form of Treasury bonds.
"Looking at foreign participation in 30-year Treasury auctions shows a downward trend in recent months," wrote Apollo Chief Economist Torsten Sløk yesterday. In other words, foreign buyers have less faith in the sustainability of the United States' debt than they had six or seven months ago.
An accompanying chart showed foreign buyers accounting for more than 80% of sales of 30-year Treasury bonds in October and early November last year. In the latest auction this month, they accounted for below 60%.
As we wrote yesterday, "Mortgage rates often shadow Treasurys and especially the yield on 10-year notes." If investors demand higher yields on U.S. government debt, that will very likely lead to higher mortgage rates.
As MarketWatch noted yesterday, "Rising yields can translate to higher borrowing costs for consumers, businesses and the U.S. government."
Mortgage Rate Trends: Past 90 Days
Purchase Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.91% | 6.94% | -0.02% | +0.06% |
| 15-Year Fixed | 5.96% | 6.01% | -0.02% | +0.04% |
| 30-Year Fixed FHA | 6.24% | 7.44% | -0.02% | -0.02% |
| 30-Year Fixed VA | 6.4% | 6.56% | -0.03% | +0.04% |
| 30-Year Fixed USDA | 6.22% | 6.36% | +0% | -0.08% |
| 30-Year Fixed Jumbo | 7.55% | 7.56% | -0.01% | +0.2% |
| 5/6 Year ARM | 7.09% | 7.13% | -0.15% | +0.29% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.98% | 7% | -0.02% | +0.03% |
| 15-Year Fixed | 5.94% | 5.99% | -0.02% | +0.02% |
| 30-Year Fixed FHA | 6.22% | 7.42% | -0.02% | -0.04% |
| 30-Year Fixed VA | 6.46% | 6.61% | -0.03% | +0.03% |
| 5/6 Year ARM | 7.31% | 7.34% | -0.24% | +0.41% |
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.
Here's what Comerica Bank's economic team is expecting from this week's data:
"The economic calendar will be light this week. Existing home sales likely rose in April despite lower consumer confidence. However, new home sales likely took a breather following an outsized increase in March. The flash releases of the Manufacturing and Services PMIs [purchasing managers' indices] from S&P Global probably will show the manufacturing sector contracted slightly in May, while the services sector expanded modestly."
New home sales are due Friday, but all the other economic reports are scheduled for Thursday.
Mortgage rates today and tomorrow
The MarketWatch economic calendar has no economic report on it either today or tomorrow.
