Mortgage And Refinance Rates, July 5

Today’s mortgage and refinance rates

Markets were closed yesterday for Independence Day. And average mortgage rates fell last Friday, once again significantly. Last week was a seriously good one for those rates. However, it wasn’t as good as one June week was bad. So, let’s not get carried away.

Still, the good news seems to be continuing this morning. Because, first thing, it was looking as if mortgage rates today might move lower. But, as always, that could change as the hours pass.

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.

I’m less certain in my doom-mongering than I have been for some time. However, on the balance of probabilities, I still think mortgage rates are more likely to rise over this month than fall.

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 9:50 a.m. (ET). The data, compared with roughly the same time last Friday, were:

• The yield on 10-year Treasury notes decreased to 2.82% from 2.9%. (Good for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields
• Major stock indexes were 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 fell to $103.10 from $108.14 a barrel. (Good for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
• Gold prices fell to $1,791 from $1,804 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 — fell to 19 from 24 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 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?

Mortgage rates rose only a tiny bit in June. And they fell back on Jul. 1, leaving them back where they were on Jun. 6, according to Mortgage News Daily’s archive.

You can see why I wrote earlier that I’m less certain in my doom-mongering. However, it’s not those rate figures that are mainly swaying me. It’s the possibility that inflation might soon begin to level out and fall, which would mean the Federal Reserve would not have to hike interest rates as much as currently planned.

Yesterday, The Wall Street Journal (paywall) ran a story under the headline, “Falling Commodity Prices Raise Hopes That Inflation Has Peaked.” And it began, “A slide in all manner of raw-materials prices — corn, wheat, copper and more — is stirring hopes that a significant source of inflationary pressure might be starting to ease.”

Another Journal article, written on Sunday, reported: “China’s slowdown may have a silver lining for the rest of the world: weaker inflation. Growth in the world’s second-largest economy has tumbled this year as COVID-19 outbreaks triggered mass lockdowns and business closures.”

Is the Fed helpless?

There’s always been an argument (I’ve mentioned it previously) that current inflation levels have been caused by supply chain disruptions due to the COVID-19 pandemic and Russia’s war in Ukraine. We could see that in real time as it happened. Lower supply resulting from those events met continuing demand, and prices rose. Economics 101.

So, if old monetary policy (the Fed leaving rates low and building its assets) didn’t cause inflation, why should we think new monetary policy (the Fed hiking rates and disposing of assets) will fix it? By this argument, the most likely outcome of the central bank’s actions is a recession with only a limited effect on prices.

That would normally be good news for mortgage rates but for little else. However, as I’ve been highlighting recently, the highest mortgage rates in history happened during a recession — because the Fed was furiously hiking its rates at the time.

What’s next?

This is a roundabout way of saying nobody can be certain what’s next for the economy or mortgage rates. My colleague Paul Centopani just posted his monthly column, Mortgage interest rate predictions: Will rates go down in July 2022?

And most of the mortgage experts he quoted believe mortgage rates are more likely to rise than fall in July. However, the minority taking the opposite view was persuasive.

For now, I’m sticking to my guns because I still think mortgage rates are overall more likely to rise than fall this month. But I’ll be watching closely in the hope more evidence begins to emerge to the contrary.

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.