Mortgage And Refinance Rates, July 1

Today’s mortgage and refinance rates

Average mortgage rates ended June by falling significantly. It was far from that month’s biggest daily change. But we’re now a long way from 6% rates.

So far this morning, it’s looking as if mortgage rates today might move lower again. But the recent volatility hasn’t gone away and things could change later in the day.

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.

Don’t assume that yesterday’s significant and welcome fall in mortgage rates is the start of some new downward trend. Of course, that’s always possible.

But I still doubt that those rates will fall far or for long while inflation continues to be such a big problem

So, my personal rate lock recommendations for the longer term must 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 12:30 p.m. (ET). The data, compared with roughly the same time yesterday, were:

• The yield on 10-year Treasury notes decreased to 2.9% from 3.02%. (Good for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields
• Major stock indexes were moderately lower soon after opening. (Good 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 rose to $108.14 from $118.57 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 $1,804 from $1,818 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 — rose to 24 from 22 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 look likely to fall. 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?

“US stocks suffer sharpest first-half drop in more than 50 years.” That was the headline on a Breaking News email alert from The Financial Times yesterday.

And you can see why investors are freaked out. The Federal Reserve Bank of St. Louis’s GDPNow tracker shows gross domestic product (GDP) declining -1.0083% during the second quarter of 2022. It fell by 0.3728% in the first quarter by the same measure.

If the official figures bear out GDPNow’s numbers, many would say we’ve been in a recession for the last six months. Two consecutive quarters of negative growth is a commonly used definition of a recession. However, a recession is only officially a recession when declared so by the National Bureau of Economic Research, an independent body of economists.

Even without that official declaration, we’ve seen plenty of bad economic data recently, especially concerning consumer sentiment and spending.

How this affects mortgage rates

Of course, when investors sell their stocks, they have to put their money somewhere. And, yesterday, a lot of them chose to purchase mortgage-backed securities (MBSs), the type of bond that largely determines mortgage rates.

All that buying pushed up the prices of those MBSs. Bond yields always move inversely to bond prices. And, in the case of MBSs, lower yields mean lower mortgage rates.

So, that’s what happened yesterday. But for how long might that continue? As always with such questions, nobody knows for sure.

My suspicion is that mortgage rates will move higher all too soon. I remain unconvinced that investors will put up for long with the high real-terms (after inflation) losses that MBS ownership currently brings. Let’s hope I’m proved wrong.

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, although May was a kinder month.

Freddie’s June 30 report puts that same weekly average for 30-year, fixed-rate mortgages at 5.70% (with 0.9 fees and points), down from the previous week’s 5.81%.

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 Jun. 16, and the MBA’s on Jun. 10. 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%	5.0%	5.0%	5.0%
Freddie Mac	4.8%	4.8%	5.0%	5.0%
MBA	5.1%	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. Recent events certainly make them look that way.

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.