Mortgage And Refinance Rates, May 13

Today’s mortgage and refinance rates

Average mortgage rates fell again yesterday. Don’t believe media reports that they’re rising because that’s what Freddie Mac’s weekly report says. When the mortgage market is moving quickly, those reports are days out of date by the time they’re published.

This morning, it’s looking as if mortgage rates today might rise. But that could change as the day progresses.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Don’t lock on a day when mortgage rates look set to fall. My recommendations (below) are intended to give longer-term suggestions about the overall direction of those rates. So, they don’t change daily to reflect fleeting sentiments in volatile markets.

You can’t deny this has been a good week for mortgage rates. You have to go back to the closing days of last month to find lower ones.

Does this mean I’m wrong to think this is the latest in a series of flashes in the plan? Maybe. Perhaps this is the start of a sustained period of falls.

But I’m still not convinced. After all, we’ve seen these rates drop plenty of times since the start of 2022, only to resume their climb. And the inflation that’s been causing recent rises remains hot.

My personal rate lock recommendations for the longer term remain:

• LOCK if closing in 7 days
• LOCK if closing in 15 days
• LOCK if closing in 30 days
• LOCK if closing in 45 days
• LOCK if closing in 60 days

>Related: 7 Tips to get the best refinance rate

Market data affecting today’s mortgage rates

Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:

• The yield on 10-year Treasury notes climbed to 2.92% from 2.86%. (Bad for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields
• Major stock indexes were higher soon after opening. (Bad for mortgage rates.) When investors are buying shares, they’re often selling bonds, which pushes prices of those down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
• Oil prices increased to $108.97 from $105.35 a barrel. (Bad for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
• Gold prices fell to $1,802 from $1,846 an ounce. (Bad for mortgage rates*.) It is generally better for rates when gold rises and worse when gold falls. Gold tends to rise when investors worry about the economy. And worried investors tend to push rates lower
• CNN Business Fear & Greed index — rose to 9 from 6 out of 100. (Bad for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are better than higher ones

*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.

Caveats about markets and rates

Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.

So use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today might rise. However, be aware that “intraday swings” (when rates change direction during the day) are a common feature right now.

Important notes on today’s mortgage rates

Here are some things you need to know:

1. Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
2. Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
3. Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
4. When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
5. Refinance rates are typically close to those for purchases.

A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.

Are mortgage and refinance rates rising or falling?

I wrote just now, ” … the inflation that’s been causing recent rises [in mortgage rates] remains hot.” But it’s true that markets are viewing that inflation differently now.

Yesterday evening, The Wall Street Journal (paywall) carried a story about the stock market: “The Dow Jones Industrial Average declined for a sixth consecutive session Thursday, extending a streak of volatility in a market driven by worries that the Federal Reserve will hamper growth in its effort to bring inflation under control.”

So, what’s been happening this week is that investors are exiting stocks (which are rewarding but risky) and turning to mortgage and other bonds (which are less rewarding but less risky). In other words, they’re seeking a haven for their money in turbulent times. So there’s more demand for those bonds, pushing up their prices.

With all bonds, higher prices inevitably mean lower yields. And, in the case of mortgage bonds (called mortgage-backed securities or MBSs), lower yields mean lower mortgage rates.

This means that inflation and fear of the Fed’s countermeasures have switched from pushing mortgage rates up to dragging them lower — even though the fundamentals remain unchanged. Investors are looking at the same phenomena through a different prism.

The question now is how long will the stock market rout continue? If confidence continues to drain from it, mortgage rates might continue to fall. But if this is just a temporary spooking of investors, those rates will likely resume their climb.

I still suspect this will be a brief intermission because stock markets have been remarkably resilient in recent years. But we just might be seeing the start of a bubble bursting. Yes, that could bring lower mortgage rates for months to come. But at a huge cost to the economy.

Read the weekend edition of this daily article for more background.

Recent trends

Over much of 2020, the overall trend for mortgage rates was clearly downward. And a new, weekly all-time low was set on 16 occasions that year, according to Freddie Mac.

The most recent weekly record low occurred on Jan. 7, 2021, when it stood at 2.65% for 30-year fixed-rate mortgages.

Rates then bumbled along, moving little for the following eight or nine months. But they began rising noticeably that September. Unfortunately, they’ve been shooting up since the start of 2022.

Freddie’s May 12 report puts that same weekly average for 30-year, fixed-rate mortgages at 5.3% (with 0.9 fees and points), up from the previous week’s 5.27%. That will have missed some of the falls on days later in the week.

Note that Freddie expects you to buy discount points (“with 0.9 fees and points”) on closing that earn you a lower rate. If you don’t do that, your rate would be closer to the ones we and others quote.

Expert mortgage rate forecasts

Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.

And here are their current rate forecasts for the remaining three quarters of 2022 (Q2/22, Q3/22, Q4/22) and the first quarter of next year (Q1/23).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were published on Apr. 19, Freddie’s on Apr. 18, and the MBA’s on Apr. 13.

Forecaster	Q2/22	Q3/22	Q4/22	Q1/23
Fannie Mae	4.6%	4.5%	4.5%	4.5%
Freddie Mac	4.8%	4.8%	5.0%	5.0%
MBA	4.7%	4.8%	4.8%	4.8%

Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. I’m afraid I’m less optimistic than any of them.

Find your lowest rate today

You should comparison shop widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:

“Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan.”

Mortgage rate methodology

The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.