The average 30-year fixed rate mortgage is 6.16% today, unchanged since yesterday. The 15-year fixed mortgage rate stands at 5.25%, down by 0.01%. The 30-year FHA mortgage now averages 5.5%, having stayed the same. Meanwhile, the 30-year jumbo mortgage rate is 6.56%, reflecting a decrease of 0.01%.
The bigger picture
"Some [mortgage] lenders are offering their lowest rates in over a year, and some in over 3 years," said Mortgage News Daily last night. That is music to the ears of those of us who long for lower rates.
But it's worth remembering that mortgage rates tend to fall when the economy is doing badly. So, what's usually good for those rates is generally bad for America's prosperity.
The mechanism by which that works is fairly straightforward. When times are good, investors prefer to put their money into risky but highly rewarding stocks. When things get dodgy, they take money out of stocks and put it into safer but less profitable bonds.
Mortgage rates are mainly determined by the yield on a type of bond, the mortgage-backed security (MBS). With bonds, yields invariably move inversely to prices. So, recent demand from people buying MBSs has pushed up prices (that's basic supply and demand in action) and dragged yields and mortgage rates lower.
Be aware that a large-scale transfer of money from stocks to bonds has not happened yet. Indeed, stock indices yesterday were close to record highs.
But talk of an AI bubble is growing louder all the time. And if confidence continues to erode, the chances of a correction or even a crash grow.
Why investors are buying more MBSs
As we've described over the last couple of weeks, some of the extra demand for MBSs is coming from the current government shutdown. It's not doing the economy any favors.
However, other pressures have been building in the background. Yesterday, MarketWatch cited a report from Bank of America that identifies "mounting risks" that are spooking some stock market investors:
- Stocks are more expensive than their historical averages, raising the specter of a bubble.
- Bear market indicators, which suggest imminent falls in stock prices, are "piling up." These include gauges of consumer and investor confidence.
- An absence of official data, due to the government shutdown, forces investors to fly blind, raising their risk levels.
- A couple of recent, high-profile bankruptcies have raised questions about the stability of smaller banks and private lenders.
Mortgage Rate Trends: Past 90 Days
Purchase Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.16% | 6.19% | +-0% | -0.16% |
| 15-Year Fixed | 5.25% | 5.29% | -0.01% | -0.16% |
| 30-Year Fixed FHA | 5.5% | 6.72% | +-0% | -0.13% |
| 30-Year Fixed VA | 5.62% | 5.76% | -0.01% | -0.1% |
| 30-Year Fixed USDA | 5.52% | 5.66% | +0% | -0.23% |
| 30-Year Fixed Jumbo | 6.56% | 6.58% | -0.01% | -0.16% |
| 5/6 Year ARM | 6.15% | 6.18% | +0.01% | -0.22% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.28% | 6.3% | +0% | -0.1% |
| 15-Year Fixed | 5.24% | 5.28% | -0.01% | -0.17% |
| 30-Year Fixed FHA | 5.46% | 6.68% | +-0% | -0.12% |
| 30-Year Fixed VA | 5.65% | 5.79% | +-0% | -0.1% |
| 5/6 Year ARM | 6.22% | 6.25% | +0% | -0.16% |
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 employment, inflation, tariffs and deficit funding are especially influential at the moment.
The shutdown means almost no official economic data will be published until the government reopens. So far, there is only one exception. The September consumer price index is scheduled for release this Friday.
Here is Comerica Bank's take on what to expect from economic reports this week:
"The September inflation report will probably show a sharp monthly increase in headline consumer prices and a moderate rise in core prices,
resulting in annual changes for both measures holding above 3%. Big jumps in beef and electricity prices are expected to have contributed to
the higher inflation print. S&P Global’s Flash PMIs [purchasing managers' indices] will likely show a further moderation in economic activity in both manufacturing and services sectors. Boosted by lower mortgage rates, existing home sales probably rose last month. Weighed down by the government shutdown, consumer sentiment likely eased in October, while households’ year-ahead and long-term inflation expectations are anticipated to have held steady."
Mortgage rates today
There are no economic reports on today's MarketWatch economic calendar. We're due September data on existing home sales tomorrow, but that rarely affects mortgage rates. Friday, with its publication of the consumer price index, could prove very different — for better or worse.
