The average 30-year fixed rate mortgage was 6.63% yesterday, unchanged since the day before. The 15-year fixed mortgage rate stood at 5.77%, the same as one the day before. The 30-year FHA mortgage averaged 6% yesterday, having stayed the same. Meanwhile, the 30-year jumbo mortgage rate was 6.89%, reflecting no change.
The bigger picture
Global oil prices fell over the extended weekend following encouraging news about a possible resolution of the Middle East crisis. Given that mortgage rates have loosely tracked oil prices since early March, that could be a good sign for us.
However, those prices began rising again overnight. That may be because we've been here more than once before: a deal looking close only to then fall apart. And, this time, it could take several days — maybe longer — for negotiations to conclude.
"Yesterday, US forces attacked missile sites in southern Iran and boats trying to lay mines, which has created some doubts that a deal is genuinely close," according to The Guardian.
What happens to mortgage rates today will depend on emerging news over the current negotiations. If the talks make progress, they may fall. But if they stumble, those rates might climb again.
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 | 6.63% | 6.67% | +0% | +0.29% |
| 15-Year Fixed | 5.77% | 5.83% | +0% | +0.25% |
| 30-Year Fixed FHA | 6% | 7.2% | +0% | +0.3% |
| 30-Year Fixed VA | 6.12% | 6.27% | +0% | +0.29% |
| 30-Year Fixed USDA | 6.06% | 6.22% | +0% | +0.36% |
| 30-Year Fixed Jumbo | 6.89% | 6.91% | +0% | +0.25% |
| 5/6 Year ARM | 6.08% | 6.13% | +0% | +0.19% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.7% | 6.73% | +0% | +0.27% |
| 15-Year Fixed | 5.75% | 5.8% | +0% | +0.26% |
| 30-Year Fixed FHA | 5.98% | 7.18% | +0% | +0.29% |
| 30-Year Fixed VA | 6.12% | 6.27% | +0% | +0.3% |
| 5/6 Year ARM | 6.17% | 6.22% | +0% | +0.11% |
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.
You might have noticed worrying reports in the financial press about the likelihood of inflation getting worse. For example, in an e-newsletter on May 10, The Economist wrote, "The Iran war is already causing pain for American motorists, who are paying more than $4.50 a gallon for petrol. Now Americans face a grocery-price shock." They were at $4.507 for regular gas on Memorial Day, according to the AAA.
On May 11, MarketWatch had similar concerns: "The surge in gasoline prices tied to the Iran war is set to drive U.S. inflation to a three-year high — and it might get worse before it gets better.
" ... That’s not the only downside of higher inflation," the report continued. "The increase in prices has handcuffed the Federal Reserve. The central bank is likely to be stymied from cutting interest rates aggressively, leaving the cost of borrowing painfully high for prospective home buyers and anyone who needs a big loan."
The Fed
Last week's price indices (the CPI, PPI and IPI ) tend to add weight to these pessimistic arguments. And they 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:
"Inflation as measured by the PCE price index [due Friday] likely rose to around 4% in April as gas prices climbed; the PCE is the Fed’s preferred inflation gauge. April likely delivered more solid gains in personal income and spending, but those gains were largely swallowed by inflation. The core PCE price index was likely little changed, hovering around three and a quarter percent. The Fed has made clear they are unhappy to see it stuck above their 2% target.
"Real GDP growth for the first quarter [also due Friday] is likely to be revised higher in the second estimate, reflecting upward revisions to consumer spending. Inflation in the first quarter also is likely to be revised higher."
Comerica also thought that today's consumer confidence would probably soften just a bit, and that Thursday's durable goods orders for April would rise, mainly on new orders for aircraft.
Comerica's predictions often differ from market expectations, which are a consensus of a wider pool of analysts' forecasts.
Mortgage rates today
There are only two economic reports on today's MarketWatch economic calendar. The consumer confidence index is sometimes consequential for mortgage rates, but we're expecting it and today's other report to be overshadowed by speculation over the prospects for a Middle East settlement.
Anyway, here are the reports scheduled for today, along with market expectations:
- May's consumer confidence index — Markets expect the index to read 92.0, only a little lower than the 92.8 seen previously
- March's S&P Case-Shiller home price index (20 cities) — Markets have no expectations for this number, which rarely has much impact beyond real estate specialists
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.
No economic reports are scheduled for tomorrow.
