Mortgage And Refinance Rates, June 16

Today’s mortgage and refinance rates

Average mortgage rates fell significantly yesterday. True, those for conventional 30-year, fixed-rate mortgages remain just above 6% by some counts. But the decrease was very welcome news after a truly terrible few days.

Unfortunately, that break may prove brief. And, this morning, mortgage rates today look likely to rise, perhaps sharply. As always, that 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.

So, now we know. Markets responded to yesterday’s announcements by the Federal Reserve positively, with a significant fall in mortgage rates. But how likely are such falls to continue? Judging from movements in markets this morning, they may already have ended.

Of course, it’s still possible that we’ll see more falls soon. But you’d be brave to bank on that.

In the meantime, 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 up to 3.43% from 3.40%. (Bad for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields
• Major stock indexes were significantly 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 decreased to $113.26 from $118.31 a barrel. (Good for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
• Gold prices inched up to $1,834 from $1,829 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 16 from 19 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 increase. 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?

What did the Fed say yesterday that caused mortgage rates to tumble? Well, according to its statement:

1. It hiked its own key rate by only 0.75%. It had previously said a 0.5% increase was planned. But last Friday’s disappointing consumer price index put paid to that. And almost everyone was expecting the higher rise. Some thought a 1% one was possible
2. ” … the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in the Plans for Reducing the Size of the Federal Reserve’s Balance Sheet that were issued in May”

That second point was important for mortgage rates. Some were worried the Fed would accelerate its running down of its holdings of mortgage-backed securities (MBSs — the type of bond that largely determines mortgage rates). And that would have been something that would probably have pushed those rates higher.

So, the Fed’s announcements were, overall, less scary than many investors had feared. And, yesterday afternoon, markets decided they’d earlier overreacted to the threat. That saw more investors buying MBSs, which pushed up their prices. With all bonds, higher prices always mean lower yields — and, for MBSs, mortgage rates.

What’s next for mortgage rates?

Was yesterday’s fall in mortgage rates the start of a new downward trend? It may be. But I doubt it.

Still, it’s quite possible those rates have further to fall in the coming days. Yesterday’s decrease was smaller than either Monday’s or last Friday’s exceptional rises. Some increases were appropriate on those days. It was on Friday that the likelihood of a 0.75% rate hike became clear.

So, the question is: How much of the total increases we saw before the Fed’s announcements were an overreaction, and how much was justified? Only markets can decide that, and their message this morning isn’t encouraging.

Personally, I doubt mortgage rates will fall far — at least, not for long. Inflation tends to drive them higher, regardless of what the Fed does. And inflation doesn’t look to be going away anytime soon, though it may well moderate later this year or sometime in 2023. Much will depend on how long supply chains remain disrupted, and Russia’s war in Ukraine grinds on.

But that’s just my opinion. And, if you glance at the table below (Expert mortgage rate forecasts), you’ll see some serious and well-resourced economists appear to expect much lower mortgage rates almost immediately. To me, it’s refreshing that some people still believe in miracles.

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

Recent trends — updated today

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 16 report puts that same weekly average for 30-year, fixed-rate mortgages at 5.78% (with 0.9 fees and points), up from the previous week’s 5.23%. That will have missed a sharp and moderate rise earlier that week, as well as Wednesday’s fall.

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 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%	5.1%	5.1%	5.1%
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.