Mortgage And Refinance Rates, May 20

Today’s mortgage and refinance rates

Average mortgage rates fell by a worthwhile amount yesterday. And Mortgage News Daily says they’re at a three-week low.

Already this morning, those rates have moved both up and down. But by approaching 10 a.m. it was looking as if mortgage rates today might rise, perhaps modestly. Of course, current volatility means that could easily 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.

Please don’t read too much into the sharp ups and downs in mortgage rates we’re seeing at the moment. So far, those are probably down to turbulence in markets rather than a fundamental shift in the underlying trend.

Still, there’s now more hope of sustained falls than we’ve had all year. Just don’t bank on those turning up until a pattern emerges from the current chaos.

Being cautious, 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 rose to 2.84% from 2.79%. (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 climbed to $113.34 from $108.74 a barrel. (Bad for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
• Gold edged up to $1,838 from $1,835 an ounce. (Neutral 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 — increased to 14 from 10 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?

Markets remain in a panic. However, things weren’t as chaotic yesterday as they were the day before. For example, the Dow lost 200 points instead of Wednesday’s 1,100.

Meanwhile, yesterday’s fall in mortgage rates was much more worthwhile than Wednesday’s. So investors seem more willing to switch from stocks to bonds (rather than hoarding cash) than they were on Thursday.

So, why the panic? There are several causes, perhaps most importantly:

1. Continuing high inflation — Gas prices in California yesterday were averaging $6.06 a gallon, an all-time high
2. Fears the Federal Reserve might plunge the economy into recession
3. Russia’s war in Ukraine and the disruption it (and western sanctions) are causing to supply chains and the prices of critical commodities
4. Concerns over China’s economy, which might be slowing as the Beijing government continues mass COVID-19 lockdowns

Most scary for investors is the prospect of “stagflation.” That’s when an economy is stagnant or shrinking while inflation continues to run hot. And it last happened in the 1970s.

There’s a very good chance we’ll avoid a repeat of that anytime soon. But it’s not impossible. And markets are worried.

Indeed, the same investors who cheered Fed Chair Jerome Powell when he announced on May 4 there were no plans for a 0.75% rate hike in June or July are now wondering whether the Fed is moving too slowly to damp down inflation. He can’t win.

It was good to see markets acting more normally yesterday. But don’t assume we won’t see more turbulence in the coming days and weeks.

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

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 mostly shooting up since the start of 2022.

Freddie’s May 19 report puts that same weekly average for 30-year, fixed-rate mortgages at 5.25% (with 0.9 fees and points), down from the previous week’s 5.3%.

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 — updated today

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 May 19, and the MBA’s on May 16. Freddie’s were released on Apr. 18, and it now updates its figures only quarterly.

Forecaster	Q2/22	Q3/22	Q4/22	Q1/23
Fannie Mae	5.1%	5.1%	5.1%	5.1%
Freddie Mac	4.8%	4.8%	5.0%	5.0%
MBA	5.2%	5.1%	5.0%	5.0%

Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual.

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.