Mortgage And Refinance Rates, July 12

Today’s mortgage and refinance rates

Average mortgage rates fell moderately yesterday. The change barely made a dent in the last three business day’s rises. But it took those rates a more comfortable distance from a 6% mortgage on the most popular loans.

And that distance may increase. Because mortgage rates today look likely to fall, judging by early movements in markets. But, of course, that might 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.

Yesterday’s fall in mortgage rates was welcome. But whether they continue lower or push higher will depend on inflation (and retail sales) data due out later this week. Overall, the direction of travel remains gently upward.

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 yesterday, were:

• The yield on 10-year Treasury notes fell to 2.91% from 2.99%. (Good for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields
• Major stock indexes were mostly 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 tumbled to $99.45 from $102.81 a barrel. (Good for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
• Gold prices decreased to $1,728 from $1,736 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 — held steady again at 29 out of 100. (Neutral 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?

One of the main reasons the Federal Reserve, economists and markets are so worried about inflation is the possibility of it becoming “sticky.” Sticky inflation is when everyone expects higher prices and wages and build them into their plans, regardless of underlying economic causes. You then enter a wage/price spiral, as we most famously did in the 1970s and early ‘80s.

We’re nowhere near that yet. But a nationwide survey published yesterday by the Federal Reserve Bank of New York brought good and bad news.

The bad news is that most of the consumers surveyed thought inflation would rise over the next year. However, the good was they thought it would get back to close to normal within five years. As the New York Fed summed it up:

[The survey] shows an increase in short-term inflation expectations, but a decline in medium-term and longer-term inflation expectations.

Will the good news take a bit of pressure off the Fed to hike rates so aggressively? It may do. But we’ll know two weeks tomorrow when the next (virtually inevitable) rate increase is announced.

More mortgage rate volatility ahead?

Perhaps more influential on the thinking behind that announcement will be two important indicators of inflation, which are due out later this week. Those are the June consumer price index (tomorrow) and the producer price index (Thursday).

Watch out, too, for Friday’s retail sales figures, also for June. They don’t say as much about inflation but they could show how the economy’s standing up to the current stresses and strains.

Mortgage rates will likely move on all those figures. Typically, those rates rise when inflation increases and fall when the news is better. And they fall when the economy’s doing badly and rise when it’s thriving.

So, there are lots of unpredictable data in prospect, any of which could send mortgage rates tumbling or soaring. In other words, there’s more volatility ahead.

Good deals out there

I’m going to repeat a section from yesterday’s report because it’s important. Mortgage lenders are struggling as applications for new loans fall. This is forcing them to be more competitive. So feel free to take advantage of this by shopping around for your next mortgage more widely.

And don’t stop there. If you have several quotes, negotiate the best possible deal for yourself, playing lenders off against each other. And see if you can afford to buy discount points. Those have been exceptionally attractive recently, buying you a bigger discount on your mortgage rate than usual.

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 and June were kinder months.

Freddie’s Jul. 7 report puts that same weekly average for 30-year, fixed-rate mortgages at 5.3% (with 0.8 fees and points), down from the previous week’s 5.70%. However, that survey will not have taken into account the appreciable rise on Jul. 6.

Note that Freddie expects you to buy discount points (“with 0.8 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.