Today's mortgage rates
Average mortgage rates increased slightly yesterday. This is what's ruining this week. If the sun hadn't come up yesterday (or the market had closed), we would have had a seven-day streak of rates inching lower. As it stands, they're slightly higher than they were this time last week. Don't get depressed just yet. They're still near six-month lows.
We will refrain from predicting what mortgage rates will do next week. Rates will likely be driven by a key inflation report next Friday, the contents of which are unclear. Also, the Trump trade (more on that below) will likely strengthen or weaken as rumors swirl that President Joe Biden may withdraw from the presidential race.
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Current Mortgage and Refinance Rates
Program Mortgage Rate APR* Variable Traditional 30 Year Fixed 6.816% 6.865% -0.02 Traditional 15 Year Fixed 6.233% 6.313% -0.07 30 Year Fixed VA 6.828% 6.881% -0.57 5/1 ARM Traditional 6.51% 7.685% +0.16 Traditional 20 Year Fixed 6.519% 6.575% -0.13 30 Year Fixed FHA 6.518% 6.568% -0.38 Traditional 10 Year Fixed 6.226% 6.308% -0.01 Rates are provided by our partner network and may not reflect the market. Your rate may vary. Click here for a personalized interest rate quote. See our interest rate assumptions. Find and lock in a low rate
Should you lock in your mortgage rate today?
This week I changed my recommendation on fixed interest rates: while most will remain fixed, borrowers with more than 60 days until settlement may want to consider a variable rate.
Assuming the Federal Reserve holds firm on its indications that it will cut general interest rates in September, I expect mortgage rates may fall by then. However, we are surrounded by swirling uncertainty and conflicting pressures on interest rates. Thus, my prediction is far from certain.
Still, my personal rate fixing recommendations are:
Locked if settled within 7 days, Locked if settled within 15 days, Locked if settled within 30 days, Locked if settled within 45 days, Float if settled within 60 days
Of course, we're not suggesting you sign a contract on a day when mortgage rates are falling. There will be plenty of days and long periods when interest rates have a bright outlook. By all means, take advantage of those days.
Additionally, with so much uncertainty at the moment, it's entirely possible that your intuition is as good as mine, if not better, so follow your instincts and your own tolerance for risk.
Current trends in mortgage interest rates
what happened?
Nothing obvious happened yesterday that would push mortgage rates higher. So, what's going on?
Last week I wrote that there were three main reasons why mortgage rates have fallen since July 2nd.
Federal Reserve Chairman Jerome Powell said recent data on inflation and employment may help the central bank cut the central bank's general interest rate sooner than many had feared. The June employment report showed a tightening in the labor market. Thursday's Consumer Price Index (CPI) showed that inflation cooled more quickly than markets had expected.
And I added: “These three constitute the Holy Grail of mortgage rate cuts.”
Nothing has changed. However, mortgage rates did go up a bit last week.
Why? Well, part of it may be due to the so-called Trump trade: the more likely it is that the former president will win the November presidential election, the higher mortgage rates tend to be.
Based on past performance and current rhetoric, the new Trump administration is likely to significantly increase the budget deficit, which would increase the supply of bonds and dilute the value of existing bonds, including mortgage-backed securities (MBS), which are the main driver of mortgage interest rates. Lower MBS prices inevitably mean higher yields and mortgage rates.
Such an administration would likely institute new tariffs, which (while good for our industry) would tend to spur inflation, and higher inflation may force the Fed to raise general interest rates again.
Politics is well beyond my pay grade, but I have a duty to report on issues that affect mortgage rates, and mortgage rates are moving right now, whether or not the market correctly assesses the impact of former President Donald J. Trump's policies.
The Federal Reserve and Mortgage Rates
The Federal Reserve's cuts to general interest rates could be key to lowering mortgage rates sustainably, but the central bank has made clear that it will act only on economic data, particularly on inflation and employment.
The Fed's favorite inflation gauge is due to be released next Friday, just five days before the central bank is scheduled to announce the progress of its interest rate policy, so the report could be crucial for the July 31 announcement.
Investors overwhelmingly believe there won't be a cut on that date. Indeed, the Wall Street Journal on Thursday ran a compelling opinion piece with the headline “Why the Fed Should Cut Rates Now, Instead of Waiting Until September.” But a July 31 cut still seems highly unlikely.
What the market will be hoping for on that day is a signal from the Fed that a rate cut in September is likely. Inevitably, the Fed will pepper that with the reservation that a final decision will depend on subsequent data. But such a signal could be very good for mortgage rates.
Next week's main inflation report
So let's take a closer look at next Friday's report: the Personal Consumption Expenditures (PCE) Price Index for June.
Like other price indexes, it is made up of four main components: two covering the month of June; the other two covering July 1, 2023 to June 30, 2024. These are year-over-year (YOY) figures.
Why are there two numbers for each period? One covers all of the categories in the survey. And the second, “core” inflation, covers the same categories but excludes food and energy prices. Economists and the Fed believe that excluding these volatile categories reveals underlying, or core, inflation trends.
Lower inflation is always good for mortgage rates, so a lower number next Friday would be good.
But the market has probably already priced in what they expect, so we would like to see a number that is even lower than what the market is expecting.
Market Expectations for PCE Price Index
That means you need to know what the market is expecting, and for that you can turn to MarketWatch. At the time of writing, the expectations are as follows:
All items PCE was 0.1% in June, up from 0.0% in May. Year-on-year all items PCE was 2.5%, down from 2.6% in May. Core PCE was 0.1% in June, unchanged from May. Year-on-year core PCE was 2.5%, down from 2.6% in May.
Remember, we want mortgage rates to fall by a lower number than expected. If it's in line with expectations, rates may remain essentially unchanged. But if it's higher than expected, that could be bad news for mortgage rates and the prospect of an imminent Federal Reserve rate cut.
Other important economic reports next week
Other economic reports next week that could affect mortgage rates include:
S&P will release Purchasing Managers' Indexes (PMIs) for July on Tuesday. One will be released for manufacturing and one for services. Markets expect some weakness. The first (of three) release of Gross Domestic Product (GDP) for Q2 2024 will be released on Thursday. Markets expect improvement in economic growth. The final release of Consumer Confidence for July. Markets expect no change.
In either case, if the report figures are lower than expected, mortgage rates will most likely fall.
Overview of next week's economic reports and events
See above for details on next week's big economic reports, and an explanation of the abbreviations below.
In the list below of next week's reports, only those in bold are likely to have a noticeable impact on mortgage rates. The rest of the reports are unlikely to have a big impact unless they contain surprisingly good or bad data.
Monday — Nothing Tuesday — S&P's July PMI. Plus existing home sales for June. Wednesday — New home sales for June. Thursday — GDP for Q2 2024. Plus data on durable goods orders, goods trade balance, and retail and wholesale inventories for June. Plus, jobless claims for the week ending July 20. Friday — PCE price index and related data for June. Plus the final reading of consumer confidence for July.
Friday could be a big day for mortgage rates.
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Next week's mortgage interest rates forecast
There's no point trying to predict what mortgage rates will be next week when just one report can change everything. The PCE Price Index is just such a report, and I would hesitate to predict it because I don't know what it will show.
How home loan interest rates are determined
The bond market generally determines mortgage and refinancing interest rates, and it is also the market where mortgage-backed securities trade.
And it depends a lot on the economy: mortgage rates tend to be higher in good times and lower in bad times, but inflation can counterbalance these trends.
Your role
But there are five roles you play in determining your mortgage interest rate: And you can have a big impact on your rate in the following ways:
Shop around for the best mortgage rate — rates vary widely from lender to lender Increase your credit score — even a small increase can make a big difference in your interest rate and payment Save up as large a down payment as you can — lenders want you to be serious about the game Stay modest on your other borrowing — the fewer your other monthly commitments, the larger the mortgage you can pay Choose your mortgage carefully — is a conventional, conforming, FHA, VA, USDA, jumbo, or another loan better for you?
Taking the time to prepare for these things will allow you to win at lower rates.
Remember, these aren't just mortgage rates
When calculating how much of a mortgage you can afford, be sure to factor in all of the upcoming costs of homeownership. Keep an eye out for something called “PITI,” which means:
Principal — the repayment of the amount borrowed Interest — the cost of borrowing money Taxes — especially property taxes Insurance — especially homeowners insurance
Our mortgage calculator can help you with this.
Depending on the type of mortgage and the size of your down payment, you may also have to pay mortgage insurance, which can easily reach triple figures each month.
But there are other potential costs, too: If you choose to live somewhere with an HOA, you'll have to pay homeowner's association dues. And no matter where you live, you should be prepared for repair and maintenance costs, so you don't have to worry about having to contact your landlord if something goes wrong.
Finally, it's hard to forget about closing costs, which are reflected in the annual percentage rate (APR) offered by your lender, which essentially spreads the costs over the life of the loan, meaning that the rate will be higher than a typical mortgage interest rate.
But you may be able to get help with closing costs and down payments, especially if you're a first-time home buyer. Learn more:
State down payment assistance programs for 2023
How to calculate mortgage interest rates
Every day, Mortgage Report receives interest rates based on your chosen criteria from multiple lending partners. It calculates the average interest rate and APR for each loan type and displays them in a chart. It averages the different interest rates so you get a more accurate picture of what interest rates you can find in the market. It also calculates the average interest rate for the same loan type, for example, FHA fixed rate vs. FHA fixed rate. The result is a clearer picture of the daily interest rate and how it changes over time.