Mortgage And Refinance Rates, May 25

Today’s mortgage and refinance rates

Average mortgage rates fell by a worthwhile amount yesterday. And you have to go back to the last week of April to find lower ones. That’s undeniably great. But, as Mortgage News Daily points out, the recent highs from which they’ve fallen were the highest in a decade. So keep things in proportion.

First thing, markets were signaling that mortgage rates today might fall modestly. But that could change early this afternoon when the Federal Reserve will release a sensitive document.

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.

Should I be changing my rate lock recommendations (below)? Maybe. But I’m not ready to do so yet.

So far, May’s been a good month for mortgage rates. But it follows six months of strong upward movements. And I’m not yet convinced we’re done with rises. (Read on for my reasoning.)

However, I might be wrong. So, it’s up to you to make up your mind about when you lock.

Still, for now, 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 edged lower to 2.74% from 2.77%. (Good for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields
• Major stock indexes were mixed soon after opening. (Neutral 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 nudged down to $110.37 from $110.94 a barrel. (Good for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
• Gold decreased to $1,850 from $1,858 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 — inched lower to 11 from 12 out of 100. (Good 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 fall a little. 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?

The Federal Reserve will publish at 2 p.m. (ET) this afternoon the minutes of the last meeting of its monetary policy body, the Federal Open Market Committee. Depending what (if anything) those minutes reveal, mortgage rates could move up or down in response. All you can do is be ready to act if rates start to rise sharply then.

Markets are kicking off in a foul mood this morning. Durable goods orders increased by only 0.4% in April, less than economists’ forecasts of 0.7% — and lower than March’s 1.1%. It’s a sign consumers are spending less.

As worryingly, The Financial Times this morning reports: “China’s premier has said the world’s second-largest economy could struggle to record positive growth in the current quarter.” And that’s another very bad omen for the global economy.

Fragmentation

Although the US economy continues to mostly do well, there’s plenty of gloom about the future. And that’s affecting many markets, including the one that largely determines mortgage rates. However, so far, those rates have been less volatile than stocks and some other bonds.

According to CNN, there’s a new buzzword seizing the imagination of attendees at the World Economic Forum (WEF), currently taking place in Davos, Switzerland. And that word’s “fragmentation.”

Fragmentation is the opposite of globalization. For 30 or 40 years, globalization has seen pain-free, cross-border trade grow. And delicate supply chains have been built on the expectation that process will continue.

But we’ve recently seen countries taking more protectionist attitudes toward international trade. You could argue this started with Brexit (Britain’s withdrawal from 40 years of European Union membership) and President Donald Trump’s trade war with China. But fragmentation now appears to be snowballing, following the pandemic and Russia’s war in Ukraine.

The May 2022 edition of the Chief Economists Outlook, published by the WEF, went into more depth:

“Geopolitical uncertainty and polarization may also contribute to driving the global economy deeper into fragmentation, with longer-term consequences for trade, prices and living standards. In combination, these shifts have resulted in the global economy entering a new phase of high volatility with fewer mechanisms for global coordination and collaboration, compounding the effects on the most vulnerable economies and individuals.”

Investors’ worries and mortgage rates

Fragmentation can be added to a long list of headaches facing investors:

• High inflation
• The specter of stagflation (stagnant growth with hot inflation) if the Federal Reserve messes up its monetary policy shifts
• Russian aggression in Ukraine stoking skyrocketing prices for energy, food and other commodities
• Continuing COVID-19 mass lockdowns in China

Those are just some of the headline worries preoccupying investors. And they might help to drag mortgage rates lower.

But I remain unconvinced. High inflation tends to push mortgage rates higher. And the Fed appears to have a steely determination to hike its interest rates regardless of the economic harm it wreaks. Again, high general interest rates usually have a knock-on effect on mortgage rates, pushing those higher, too.

However, we’re now in unknown territory. And we’ll just have to wait and see whether the usual rules continue to apply to rates over the coming weeks, months and years.

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 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

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. But it now updates its figures only quarterly so they’re already looking stale.

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.