Mortgage rates continue to move lower this week even as higher borrowing costs have kept activity subdued across many areas of the housing market.
According to data at HousingWire’s Mortgage Rates Center, the average rate for 30-year conforming loans was at 7.01% on Tuesday, down 5 basis points from one week ago and 10 basis points lower than two weeks ago. The rate for 15-year conforming loans averaged 6.66% on Tuesday, compared to 6.79% a week ago.
HousingWire Lead Analyst Logan Mohtashami recently wrote that higher mortgage rates “have increased recession risk by targeting the one sector that always falls before every recession: residential construction workers. And higher rates are also impacting the future supply of homes, as housing permits have been in a downtrend for a while.“
Data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD) showed that housing starts shrank 4.4% year over year in June. But this pullback was led by the multifamily sector, where starts dropped 23.4% compared to June 2023. Single-family starts rose 4.4% during the year. Permits fell by 3.1% year over year, including a 1.3% decrease in single-family permits.
Housing completions also grew by 15.5% during the year, although the bulk of this was tied to multifamily (40.2% growth). There were a record number of apartments delivered in many markets last year, but builders appear to be pulling back to avoid a glut of supply.
Lower mortgage rates are having a positive impact on application levels, with the Mortgage Bankers Association (MBA) reporting last week that applications were up 3.9% on a yearly basis during the week of July 12. Most of this growth was tied to refinance applications, which were up 37% year over year.
Fannie Mae economists project two rate cuts by the end of 2024. In a report released Tuesday, the government-sponsored enterprise anticipated the Federal Reserve would cut benchmark rates in September and December, resulting in the average 30-year rate declining to 6.8% in 2024 and to 6.4% in 2025.
Fannie also upwardly revised its forecast for purchase mortgage origination volume to $1.22 trillion due to home price appreciation that is expected to finish 2024 higher than previously anticipated. Fannie reduced its forecast for refinance originations to $346 billion this year but expects $563 billion in refis next year. In total, Fannie is forecasting $2.11 trillion in origination volume in 2025, up from a projected $1.70 trillion this year.
Survey data released Tuesday by Bright MLS concluded that “affordability is increasingly becoming more of a challenge for potential homebuyers.“ The survey of 1,180 real estate agents across six Mid-Atlantic states and the District of Columbia found that 14% of sellers in June saw a contract fall through due to a buyer’s inability to secure financing, which was up from 11% in May.
The surveyed agents also noted that affordability was the No. 1 reason for a buyer pausing their home search efforts over the past six months, while high mortgage rates were the No. 2 reason. Each of these factors were cited by nearly 60% of respondents.
“With mortgage rates hovering around 7% and home prices continuing to rise, financing is a growing challenge for buyers, and this is beginning to impact a buyer’s ability to make it across the finish line,” Bright MLS chief economist Lisa Sturtevant said in a statement.
Good news, however, came in the form of less competition. In June, 38% of buyers successfully completed a purchase through Bright MLS while submitting only a single offer. That was up from 31.2% one year ago.
This interview has been edited for length and clarity.
Flávia Furlan Nunes:How would each administration’s approach to the economy affect the mortgage industry?
Mark Calabria: You’re starting with the absolute most important aspect. While differences in housing mortgage policy are important, the overall driver will be the overall economy — predominantly the question of inflation and jobs. I recognize there are some out there who would argue that Trump will be more inflationary. He will be less, particularly given the experience we’ve had. That’s the benefit: We’ve had four years of Trump and almost four of Biden. There is actual history that compares.
Inflation will be more stable under Trump and you would see a decline in interest rates and mortgage rates more than you would under Biden. That said, of course, we’ve seen an overall decline in interest rates, even if they do remain somewhat high. It should be kept in mind that it doesn’t matter who the president is in 2025; we’re not going back to 3% mortgage rates. The difference between administrations, at most, would be a percentage point.
Nunes: What do you expect for the job market in a Biden or a Trump administration? Calabria: We are seeing a slowing in the job market, and in Biden 2.0, I would expect the slowing trend to continue. You would see a number of things done in the Trump administration that might put some additional steam back in the job market. But I recognize forecasting is tough here. That said, what you think will happen to inflation and jobs should be 80% of what you think will happen to the housing and mortgage market.
The traditional forecasting community consistently underestimated growth during the Trump years and consistently overestimated growth during the Biden years. I don’t want to get too much of a digression, but the typical macro models used in the forecast community are very much demand-driven. Things like regulation don’t enter their forecast. It’s not that they’re intentionally wrong; it’s just that they’re not capturing the whole picture.
Nunes: On the fiscal front, several provisions from the Tax Cuts and Jobs Act of 2017 are scheduled to expire at the end of 2025, barring action from Congress.
Calabria: Obviously, the corporate fiscal incentives are quasi-permanent. It’s the individual things that come up. With a Trump administration, you’re largely seeing some tweaks and extensions of the 2017 changes, and they certainly are discussing: what can you do in terms of perhaps stimulating the housing market?
One of the things Republicans are looking at, on the tax side, is some indexing, perhaps temporarily, of the capital gains relief that you see in homeownership. It hasn’t changed since 1997. And of course, $500,000 for a couple in 1997 was a lot of money. It’s a lot less now. Both administrations will be looking at tax incentives to reduce lock-in effects in the existing-home sell side. You can debate if one is more effective than the other. The Biden side seems to be more tax-credit driven. My sense on the Republican side? It is probably more likely focused on capital gains.
Nunes:Regarding monetary policy, The Wall Street Journal reported that Trump’s allies are “quietly” drafting proposals in an attempt to erode the Federal Reserve’s independence. What do you have to say about the independence of the Fed under a potential Trump administration?
Calabria: The Fed operates within the government. The Fed coordinates with administrations. The argument that Trump is somehow bringing a threat to the Fed’s independence is grossly exaggerated, if not completely false. I don’t have a lot of sympathy for that argument. My argument is not that there aren’t going to be some questions from the Trump administration about Fed behavior. My argument is, that’s how every administration behaves to some degree. They just do it differently.
Nunes: How do you see a Biden or a Trump administration addressing the affordability challenges?
Calabria: Housing has been subjected to inflationary pressures like the rest of the economy. There’s certainly a view on the Republican side that you could address inflationary pressures writ large. For instance, the same thing that has been driving up gas and grocery prices has impacted cement, lumber or labor prices. So, they’re all caught together to some extent. If you deal with the underlying inflationary issues, that will help with housing affordability. That’s one broader aspect.
When you drill down into what’s likely to happen, you haven’t seen specific proposals. Most of the Biden proposals, even though they’ll put up some pieces of paper that say “housing supply” at the top, 90% of it is housing demand. What is a $10,000 tax credit for down payments but increasing demand? That’s not going to make housing more affordable. It may make housing more affordable to the individual who gets it, but it makes overall housing less affordable.
Nunes: What else can be done to increase the housing supply?
Calabria: Certainly, on the lending side, the constraint is not you and I get a mortgage; the constraint is the builder getting construction finance. That results from 30% to 40% of community banks since Dodd-Frank having disappeared.
You’re going to see an approach under a Trump administration that’s much more looking at how we strengthen community banks. You need to be able to do that if you want to make construction financing readily available. It’s one of the reasons that you’ve seen consolidation among the builders. You have to deal with the construction lending side of it. And you would see that addressed better under a Trump administration than in the Biden administration.
Nunes: Construction finance is only one challenge. What about labor costs?
Calabria: There’s also a constraint on skilled labor. You have limitations on electricians and carpenters, some of this of course is when you increase spending in other parts of the economy — for example, the infrastructure bill. When you increase demand in the economy for construction labor, you’re increasing the cost of housing. You can argue that it’s worth it, and that’s fine — I’m an economist by training and I don’t think there are any free lunches.
You’ll see a different conversation at a national level in terms of where people should devote their careers. So much of the conversation of the Biden administration has been about student debt relief for doctors and lawyers. You’ll see a much bigger conversation in the Trump administration about how it’s a great thing to be a plumber, carpenter and electrician, and how we strengthen apprenticeship programs. It’s not to take away from doctors and lawyers, but it’s just an emphasis on you won’t get a lot of new housing built unless you can do something about the constraints in skilled labor.
Nunes: What is your opinion on the current administration’s initiatives in the mortgage space?
Calabria: There’s been a weakening of underwriting standards by this administration, not just at FHA, but also at Fannie and Freddie. If I can be slightly humorous, my description of the Biden administration’s housing policies is that they see two families competing aggressively over one house and they believe the solution is to add a third family. You’ve seen this massive expansion, high debt-to-income lending, that has been irresponsible and doesn’t do anything other than erode affordability. That has added to housing demand.
Keep in mind that you’re in an economy where you saw big increases in homeowners insurance. If you’re getting somebody into a loan with a 50 DTI, and then suddenly they’ve got an increase in their homeowners insurance, that’s not a sustainable world. There have been increases in allowable loan to value. Obviously, there’s been a lot of pressure to increase appraisals and weaken appraisal independence, which probably has inflated housing values as well.
They’ve done things that even don’t show up as directly. The CFPB has pushed for the elimination of medical debt and other things [from credit scores]. That may be the right policy, but it inflates FICO scores. If you’re not increasing the credit box to offset that, then you are knowingly decreasing the underwriting.
Nunes: Do you think that the federal government has limited means to influence housing supply, so wouldn’t it be expected to do more on the demand side?
Calabria: Washington doesn’t have a lot of levers in terms of housing supply. I understand if you feel you have to do something, most of your tools are demand-oriented. But that said, you have to recognize that increasing demand when supply is limited makes it worse, not better. There’s a lack of recognition of that.
There have been proposals on the Republican side to release some small amounts of federal land. There’s a process in Nevada, in Clark County around Las Vegas, where you can convert federal land to housing development. The proposal is to essentially allow it in other cities. The Joint Economic Committee made some estimates, and it could result in 3 million new units being built. The federal government does have land. Some of it is in urban areas, like Denver, that are facing affordability challenges but can be converted. Nobody’s talking about chopping down the redwoods or building housing in Death Valley. But it’s hard to see this administration ever thinking about federal lands to do anything other than be dirt.
Nunes:Among the steps taken by this administration, they reduced mortgage insurance premiums for FHA loans. How do you evaluate this decision?
Calabria: It only increases demand. There are things that the industry may like. Some of that is good for overall affordability. Some of it isn’t. Did housing prices go down after they did that? Did homeownership go up after that? No.
Obviously, the industry is under tremendous pressure, particularly on the nonbank side. Rather than trying to target things that look like they help the industry, if you target things to get the overall market going, that’s the better approach. For instance, on the tax side, if you allow some capital gains relief, many people with those 3% mortgages may be willing to sell their homes, which will increase the volume, increase existing-home sales and bring some of the volume back.
Nunes:What changes could we expect for the CFPB under a potential Trump administration?
Calabria: I don’t think the CFPB is going away — as much as that would be nice. But I do think you are going to see a difference in the stance, which will matter in the mortgage industry, in terms of enforcement and obligations. The Republicans’ approach to the CFPB is to say that there are wrongdoers; we will go after the bad guys. This administration says the same thing, and that’s where the overlap is. The difference is this administration also has the view that we’re going to use the CFPB to pick winners and losers to redistribute to our friends and engage in a lot of social engineering. And that’s a much different approach from just going after the bad guys.
Writ large on compliance and regulatory costs, Trump’s CFPB will be considerably lower. Post Dodd-Frank, one of the problems has been that it costs so much more to originate loans. A tremendous amount of that is because of regulatory costs. It’s not like the bad guys get to run wild; you’d still see enforcement.
Nunes: What’s the future of HUD, in your view?
Calabria: HUD is not going away. There may be some changes in some of those programs. And that’s fine, because much of what they’re doing today is just adding to demand without added supply. And of course, you’re not going to be able to deal with inflationary pressures unless you’re willing to make some changes to the budget. And if we’re going to make changes to the budget, anything, including HUD, should be on the table.
Nunes: Would a Trump administration’s goal be to resume some of its past projects, such as releasing Fannie and Freddie from conservatorship or implementing more caps on their purchases?
Calabria: There’s a much higher chance in a Trump administration of Fannie and Freddie coming out of conservatorship. You don’t need Congress to do it. Having been the guy who started it, I know a lot of work was done. There’s a road map; it’s all doable. It’s a benefit to the industry because you reduce the degree to which politics drives. You have to go back to letting Fannie and Freddie behave as businesses. It will bring a lot more certainty to the industry.
The restrictions put in place were always done to minimize disruptions to the primary purchase market. In 2020, when investment caps were put in place, everybody said the sky was falling. Did the sky fall? No. That business got picked up. It was done by other people. Trump is a developer. The guy spent his entire life in real estate. He tends to have people in the administration who understand how the housing and mortgage markets work.
Just like you saw in 2021, any constraints on Fannie and Freddie will be done to minimize disruption in the mortgage market. You can look at all these people who said in 2018 and 2019 that Calabria would kill the mortgage market. It didn’t happen. Nobody benefits from a strong Fannie and Freddie more than the mortgage industry.
Nunes: One initiative from Freddie Mac is a pilot program to purchase closed-end second mortgages. Do you support this idea?
Calabria: I would certainly expect that to get suspended. Should we be spending the portfolio on second mortgages instead of mortgages that are purchases? I recognize that the industry is hurting. Everybody wants to focus on things that bring the overall market back. But you can’t blow up Fannie and Freddie at the cost of it. That might feel good in the short run, but it’s not the right approach in the long run.
Nunes: A topic that’s been covered extensively at HousingWire is the National Association of Realtors’ settlement and changes to agent commission structures. What are your thoughts on that?
Calabria: If you remember, there was a 2020 settlement with NAR. That got thrown out the door. There’s a very high likelihood that it reverts back to the 2020 settlements. Again, that doesn’t stop some of the litigation out there. But you would see a very different stance toward the real estate industry and the kind of war on Realtors comes to an end.
Nunes: Who would you expect to lead federal housing agencies and companies under a potential second Trump term?
Calabria: It’s too early to say. But you’re likely to have people who are both experienced regulators and people with deep experience in the capital markets. You’ll have people who have experience with Trump’s style and understand how he governs. It’s less surprising, perhaps, this time around.
Nunes: Would you return to the government? If so, in what capacity?
Calabria: I believe in public service. If asked to serve in a capacity to make a difference, I would certainly be inclined to accept. But which capacity, that’s up to the president. You don’t get to choose it. My interest is broadly financial services.
Two days after regulators levied more fines against Citigroup for poor data quality management, the megabank said that it’s not changing its expense guidance for 2024, and it will aim to absorb any additional remediation-related costs into the firm’s existing spending plan.
Citi also said it will adhere to its previously released capital distribution plan, which includes an increase to its common dividend, and it plans to repurchase $1 billion of common stock in the third quarter. In the first quarter of this year, Citi bought back $500 million of common stock.
The updates came during Citi’s second-quarter earnings call, less than 48 hours after the Federal Reserve and the Office of the Comptroller of the Currency assessed a total of $136 million in civil money penalties against the bank for violating a pair of 2020 consent orders related to its risk management and internal controls systems.
Citi, which is engaged in a multiyear risk-management overhaul to correct and enhance those systems, even as CEO Jane Fraser tries to simplify the company and drive higher returns, has 30 days to submit a “resource review plan” to the OCC. The plan is supposed to show that the bank has enough resources allocated to the overhaul to achieve compliance in a timely and sustainable manner.
Citi’s plan, which executives say is already being drafted, will also help determine if additional resources, including more spending, are necessary to finish what the $2.4 trillion-asset company has called a “transformation” of its risk-management programs.
Citi “has been able to find productivity opportunities” this year to keep it within its stated expense guidance, and the bank will stay focused on finding more such cost savings in the event that more compliance spending is needed, Chief Financial Officer Mark Mason told analysts Friday.
Citi has been forecasting total operating expenses of between $53.5 billion and $53.8 billion for the full year. On Friday, Mason said the final tally will likely wind up on the higher end of that range.
“We are actively managing that with an eye towards what’s required” for the risk management overhaul in order “to keep it on track, to accelerate in areas where we’re behind,” Mason said.
Analysts pressed Mason and CEO Jane Fraser about the bank’s lack of sufficient progress, at least in the eyes of its regulators. Mike Mayo of Wells Fargo Securities asked why the 2020 consent orders haven’t been resolved.
“Is it not enough people? Is it not enough money? Do you need to look at it in a different way?” Mayo said.
Fraser responded that the project “is a massive body of work” with multiple layers, and pointed out that the regulators did acknowledge this week that Citi has made some progress.
Vivek Juneja of JPMorgan Securities wondered how much more time Citi needs to fix everything.
“How much longer for you to sort of get this past you?” Juneja said. “Are you talking a couple of years?”
The bank is trying to “get this done as quickly but as robustly as possible,” Fraser responded.
“We’re doing this by making strategic fixes and investments, rather than what I would call the old Citi way, which is a series of Band-Aids that remediate but don’t actually fix the underlying issue,” she said. “I’m not expecting this to change the time frames.”
Amid Citi’s latest regulatory troubles, the company reported a solid quarter. Total revenues were $20.1 billion, up 4% year over year, in part because each of the bank’s five business lines, including its long-languishing wealth segment, grew profits during the second quarter.
Excluding the impact of divestitures, firmwide revenues rose 3%. As part of Fraser’s plan to turn around Citi, the bank has been selling and winding down certain non-U.S. consumer franchises.
The increase in revenues and a decrease in expenses helped drive up Citi’s net income, which totaled $3.2 billion, a 10% increase from the same quarter last year.
Growth in Citi’s banking segment, which includes both business banking and investment banking, was particularly strong compared with the year-ago period, rising 30%.
Operating expenses declined 2% year over year to $13.4 billion, primarily as a result of an organizational simplification and other cost-reduction measures, Citi said.
The decrease in expenses was partially offset by the regulatory fines and other ongoing investments in the risk management overhaul, according to the bank.
Default servicing experts have been optimistic that affordability concerns will be mild this year, but they consider some of the pressures on homeowners more worrisome than others.
When asked to distribute 100 points of risk among delinquency triggers, respondents to a recent Auction.com survey collectively assigned the greatest share of risk, at 37 points, to the “hidden” housing costs of property taxes and insurance.
Home purchasers often are most focused on upfront price and financing costs when they buy, so they can sometimes overlook ongoing expenses like T&I. That’s a concern for servicers, who often bear some responsibility for helping consumers manage these costs.
“Although the risk of rapidly rising delinquencies in the near term remains low, there are some signs of consumer and homeowner stress emerging,” Daren Blomquist, vice president of market economics at Auction.com, said in a report on the second quarter survey.
The online real estate marketplace surveyed a group of experts from depositories, agencies, government-sponsored enterprises, nonbanks and asset owners/investors for the survey. Auction.com found the first two groups to be particularly concerned about T&I.
Banks, government agencies and GSEs assigned 40 points of risk to taxes and insurance, in contrast to nonbanks, 34; and asset owners/investors, 25.
In addition to T&I, other concerns survey respondents collectively ranked highly included delinquencies rising in consumer debts outside the home loan market, 32; followed by rising unemployment, 15; commercial mortgage defaults, 10; and falling home prices, 6.
While these findings show there are a number of active performance concerns in the market, other answers to the survey explain why most respondents expect them to be mild.
Their projections suggest unemployment, which was pegged at 4.1% in the latest jobs report, will remain historically low.
Over three-quarters of respondents expect home price gains to persist throughout 2024.
As a result, survey participants anticipate high home equity levels that support performance, with serious-delinquent loans having an average combined loan-to-value ratio of 65%.
(Lower CLTVs reflect higher equity levels, and the traditional tolerance for higher ratios at origination is a maximum of 80%; but there are many risk-management vehicles designed to accommodate lower down-payments and elevated ratios above that level.)
Equity levels may shift over time, but right now respondents expect more than half or 51% of loans in loss mitigation to return to performing status given where they stand, with some typical adjustments for different types of mortgages.
Expectations are that 58% of loans purchased by government-sponsored enterprises Fannie Mae and Freddie will return to performing status after going through loss mitigation, followed by a little less than half government insured products at 49%, and 34% for non-agency mortgages.
The survey pegs the average combined LTVs for the different product types as follows: Fannie and Freddie loans, 58%; government insured mortgages, 49%; and non-agency products, 74%.
Around two-thirds or 67% of all respondents expect a rise in foreclosures to materialize this year.
More than half of the total, or 57%, anticipate foreclosures will increase 1% to 4% for their companies. Only 10% of the total project a foreclosure increase of 5% to 9%, with another 10% forecasting a drop of 5% or more. The rest of respondents anticipate foreclosures will either remain stable or decline by no more than 4%.
Survey participants in the non-agency market were unified in expectations that foreclosures will rise, with two-thirds anticipating an increase in the 1% to 4% range, and others anticipating a jump of 5% to 9%.
Purchase loan applications have surged for two weeks in a row, but rates for conforming mortgages are inching back up toward 7 percent this week as investors weigh the odds of Fed rate cuts.
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Homebuyer demand for purchase rates picked up last week for the second week in a row, as mortgage rates dropped to the lowest levels since March. But rates for conforming mortgages are once again inching back toward 7 percent this week as investors weigh the odds of Fed rate cuts later this year.
Applications for purchase loans were up by a seasonally adjusted 2 percent last week compared to the week before, according to a weekly survey of lenders by the Mortgage Bankers Association. While it was the second consecutive week-over-week increase in demand for purchase mortgages, applications were still down 12 percent from a year ago.
TAKE THE INMAN INTEL INDEX SURVEY FOR JUNE
Refinancing applications during the week ending June 14 were essentially flat from the week before, but up 30 percent from a year ago.
Mike Fratantoni
“Mortgage rates dropped last week following the latest inflation data and the [Federal Reserve] meeting, with the 30-year conforming rate dropping to 6.94 percent and reaching its lowest level since the end of March,” MBA Chief Economist Mike Fratantoni said in a statement Wednesday.
Federal Reserve policymakers held rates steady at their June 12 meeting, saying they wanted more evidence that inflation is subsiding before cutting interest rates.
But the Fed only has direct control over short-term rates. Bond market investors who fund most mortgages brought long-term rates down sharply last week after seeing the latest Consumer Price Index reading, which showed inflation eased in May.
Mortgage rates came down again the next day on reports showing May jobless claims jumped to their highest level since August 2023 and that wholesale prices unexpectedly dropped in May brought long-term rates down again.
Rates on 30-year fixed-rate conforming loans dropped to 6.81 percent on June 13, down nearly half a percentage point from a 2024 high of 7.27 percent registered April 25, according to rate lock data tracked by Optimal Blue.
Mortgage rates bounce
But mortgage rates have been on the rebound this week as a number of Fed policymakers — including the presidents of the Federal Reserve banks of New York, Boston, Dallas and St. Louis — continue to stress that the Fed is looking for more data confirming that inflation is headed toward their 2 percent target before cutting rates, Reuters reported.
Optimal Blue data shows that after climbing for three days in a row, rates on 30-year fixed rate loans were averaging 6.88 percent Tuesday.
An index maintained by Mortgage News Daily showed rates for 30-year fixed-rate loans had climbed back above 7 percent Monday but flattened out since then.
(Rates reported by Mortgage News Daily are higher because they are adjusted to estimate the effective rate borrowers are offered, regardless of what points they’re willing to pay. Optimal Blue tracks contracted rates, including those locked in by borrowers who paid points to get a lower rate.)
The next big move in mortgage rates could be triggered on June 28, when the Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, is set to be updated with data from May.
PCE and Core PCE trending down
The PCE price index showed inflation dropping to 2.65 percent in April, the first improvement since January. Core PCE, which excludes the cost of food and energy and can be a better indicator of underlying inflation trends, has been moving in the right direction for 15 consecutive months, falling to 2.75 percent in April.
Forecasters at Pantheon Macroeconomics are predicting the PCE price index will show inflation cooled more in May than many economists are predicting. Recent evidence that inflation will continue to ease includes:
Oliver Allen
“The sharp falls in total housing starts and building permits are surprising; they take both series to their lowest levels since June 2020,” Pantheon Senior U.S. Economist Oliver Allen said in a note to clients Thursday. “Lower rates will help sales eventually, but we expect them to be accompanied by a weaker labor market and a rising unemployment rate, thinning the ranks of potential homebuyers.”
The latest jobless numbers show claims for unemployment insurance during the week ending June 15 dropping slightly from the week before, to 238,000. But the four-week average increased to 232,750 — the highest level since September 2023.
“The Fed’s forecast that the unemployment rate will be unchanged throughout the rest of this year looks implausibly upbeat,” Pantheon Chief Economist Ian Shepherdson said in a note to clients Thursday.
Pantheon is forecasting that the unemployment rate will rise to 4.5 percent by the end of the year, up from 4.0 percent in May.
While Fed policymakers indicated they only expect to cut short-term rates once this year, futures markets tracked by the CME FedWatch Tool are expecting at least two cuts, with the first coming in September.
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There was a slight increase in mortgage application volume during the week ended June 14. For a change, it was accounted for by the home purchasing component.
The Mortgage Bankers Association says its Market Composite Index, a measure of loan application volume, increased 0.9 percent on a seasonally adjusted basis although it lost 0.1 percent before adjustment compared with the previous week.
The Refinance Index decreased 0.4 percent from the prior week and was 30 percent higher than the same week one year ago. The refinance share of mortgage activity remained unchanged at 35.2 percent of total applications.
Purchase loan applications rose 2.0 percent from one week earlier, its second straight positive performance. The unadjusted Purchase Index decreased 0.1 percent compared with the previous week and was 12 percent lower than the same week one year ago.
“Mortgage rates dropped last week following the latest inflation data and the FOMC meeting, with the 30year conforming rate dropping to 6.94 percent and reaching its lowest level since the end of March,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Purchase applications increased a small amount for the week, led by applications for conventional loans. Refinance application volume was also down slightly for the week but remains about 30 percent higher than this time last year.”
Added Fratantoni, “Purchase volume is still more than 10 percent behind last year’s pace, but MBA is forecasting a pickup in home sales for the remainder of the year as more inventory is hitting the market.”
Highlights from MBA’s Weekly Mortgage Application Survey
The average loan size slipped $900 to $372,300 while loans for home purchasing fell from $428,700 to $420,300.
The FHA share of total applications decreased to 12.7 percent from 13.1 percent while the VA share increased to 14.8 percent from 14.7 percent. The USDA share of applications was unchanged at 0.4 percent.
The 6.94 average contract rate for conforming 30-year fixed-rate mortgages (FRM) was down 8 basis points compared to the prior week. Points decreased to 0.61 from 0.65.
Jumbo 30-year FRM had an average rate of 7.12 percent, down from 7.18 percent,with points decreasing to 0.48 from 0.54.
The average rate for 30-year FRM backed by the FHA decreased to 6.79 percent from 6.87 percent,with points increasing to 0.93 from 0.92.
Fifteen-year FRM rates averaged 6.47 percent, a 13-basis point drop from the prior week. Points increased to 0.60 from 0.55.
Adjustable-rate products (ARMs) also enjoyed some rate relief. The popular 5/1 ARM rate decreased to 6.27 percent from 6.45 percent,with points increasing to 0.96 from 0.81.
The ARM share of activity fell to 6.0 percent of total applications from 6.3 percent the previous week.
Average mortgage rates edged a little higher last Friday. But that didn’t spoil a good week during which those rates tumbled overall.
Earlier this morning, markets were signaling that mortgage rates today might increase. But these early mini-trends often alter speed or switch direction as the hours pass.
Current mortgage and refinance rates
Find your lowest rate. Start here
Program
Mortgage Rate
APR*
Change
Conventional 15-year fixed
6.445%
6.524%
+0.01
30-year fixed VA
6.962%
7.008%
+0.28
Conventional 30-year fixed
7.007%
7.057%
+0.01
Conventional 20-year fixed
6.774%
6.829%
+0.08
Conventional 10-year fixed
6.377%
6.455%
+0.03
5/1 ARM Conventional
6.612%
7.913%
-0.03
30-year fixed FHA
6.907%
6.953%
+0.2
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Should you lock your mortgage rate today?
Don’t be fooled by recent falls in mortgage rates. It may feel as if those rates have been falling more than rising, not least because they have since mid-April. But there was a sharp rise immediately before the subsequent fall. And, if you go back three months, mortgage rates were lower then than they are now.
Looking across the longer term, mortgage rates remain on an upward trajectory. But, this year, they’ve effectively been moving sideways so perhaps the upward trend is moderating or plateauing.
What we’re not seeing yet are sustained falls. And I judge the chances of falls and rises at roughly 50-50. Would you want to bet on those odds? I wouldn’t.
So, my personal rate lock recommendations 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
LOCKif closing in 60days
Of course, don’t lock your rate when mortgage rates look likely to fall. My recommendations are based on longer trends. And, within those, there will be rate-friendly days and longer periods that you can take advantage of.
With so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So, let your gut and your own tolerance for risk help guide you.
>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 are mostly compared with roughly the same time the business day before, so much of the movement will often have happened in the previous session. The numbers are:
The yield on 10-year Treasury notes climbed to 4.29% from 4.22%. (Bad for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were falling this morning. (Good for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
Oil prices ticked down to $79.05 from $79.07 a barrel. (Neutral for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices decreased to $2,337 from $2,346 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Because gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — inched down to 38 from 40 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 often 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, post-pandemic upheavals, and war in Ukraine, 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 rise. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
Find your lowest rate. Start here
What’s driving mortgage rates today?
This week
Seven senior Federal Reserve officials have speaking engagements today and tomorrow. And they may try to correct any misapprehensions markets still have following last Wednesday’s Fed events.
The Fed made it pretty clear then that it expected to make only one cut to general interest rates during 2024. But markets are already second-guessing that, with the CME Group finding investors reckon there’s a 70% chance of two such cuts.
That explains markets’ muted reaction to last week’s pronouncements by the Fed. They simply didn’t believe the central bank’s message.
Investors have a pretty patchy record for second-guessing the Fed. But they’re sometimes correct. If they’re right this time, that could be good for mortgage rates. But, if the Fed sticks to its guns, that could be bad for them.
Today
This morning’s lone economic report is the June Empire State manufacturing survey. I don’t remember the last time that affected mortgage rates so we shouldn’t lose any sleep over it.
There is some economic news around that could influence markets. China’s growth is slowing and its property market is in trouble. And the French snap parliamentary election is freaking out some investors as the possibility of a hard-right party taking power is regarded as economically undesirable.
But the Chinese and French news would normally be helpful to mortgage rates. So, why were those rates rising overnight?
Well, it may be that investors are jittery over tomorrow’s economic data.
Tomorrow
Tomorrow morning, we’re due May data on:
Retail sales — Markets expect sales to edge up by 0.2% from April’s 0.0%
Industrial production and capacity utilization — Markets expect industrial production also to nudge up to 0.4% from April’s 0.0%. And capacity utilization, too, is expected to improve: to 78.6% from 78.4%
So, markets are expecting those numbers to show improvements, which would normally be bad for mortgage rates. But, luckily, those expectations are already baked into mortgage rates. And it’s the gap between those and tomorrow’s actual numbers that could create volatility.
For the best chance of mortgage rates falling, we’d like to see smaller numbers than markets are expecting. Bigger ones could push those rates upward.
The rest of the week
Bond markets are closed on Wednesday for the Juneteenth holiday. So, mortgage rates shouldn’t move that day, and my daily report won’t appear.
I’ll brief you on Thursday and Friday’s economic reports that might move mortgage rates on the day before each appears. But most on the calendar rarely affect those rates.
If you’re hungry for more information about what’s moving mortgage rates, do click through to the latest weekend edition of this daily report. It provides a deeper analysis together with a preview of what to expect in the coming week. It’s published each Saturday morning soon after 10 a.m. Eastern.
Recent trends
According to Freddie Mac’s archives, the weekly all-time lowest rate for 30-year, fixed-rate mortgages was set on Jan. 7, 2021, when it stood at 2.65%. The weekly all-time high was 18.63% on Sep. 10, 1981.
Freddie’s Jun. 13 report put that same weekly average at 6.95%, down from the previous week’s 6.99%. But note that Freddie’s data are almost always out of date by the time it announces its weekly figures. Still, they’re a good way to track trends.
Expert forecasts for mortgage rates
Looking further ahead, Fannie Mae 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 rate forecasts for the last three quarters of 2024 and the first quarter of 2025 (Q2/24, Q3/24 Q4/24 and Q1/25).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on May 22 and the MBA’s on May 17.
Forecaster
Q2/24
Q3/24
Q4/24
Q1/25
Fannie Mae
7.1%
7.1%
7.0%
6.9%
MBA
6.9%
6.7%
6.5%
6.4%
Of course, given so many unknowables, both these forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
Important notes on today’s mortgage rates
Here are some things you need to know:
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’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
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
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
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.
Find your lowest mortgage rate today
You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:
“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”
In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?
Verify your new rate
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.
How your mortgage interest rate is determined
Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.
Factors that determine your mortgage interest rate include:
Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate
Remember, every mortgage lender weighs these factors a little differently.
To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.
Verify your new rate. Start here
Are refinance rates the same as mortgage rates?
Rates for a home purchase and mortgage refinance are often similar.
However, some lenders will charge more for a refinance under certain circumstances.
Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.
This creates a tidal wave of new work for mortgage lenders.
Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.
In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.
Also, cashing out equity can result in a higher rate when refinancing.
Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.
Check your refinance rates today. Start here
How to get the lowest mortgage or refinance rate
Since rates can vary, always shop around when buying a house or refinancing a mortgage.
Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.
Here are a few tips to keep in mind:
1. Get multiple quotes
Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.
Some simply go with the bank they use for checking and savings since that can seem easiest.
However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.
So get multiple quotes from at least three different lenders to find the right one for you.
2. Compare Loan Estimates
When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.
You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:
Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs
Remember, the lowest interest rate isn’t always the best deal.
Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.
Also, pay close attention to your closing costs.
Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.
3. Negotiate your mortgage rate
You can also negotiate your mortgage rate to get a better deal.
Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.
You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.
And if they’re not, keep shopping — there’s a good chance someone will.
Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?
Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).
Fixed-rate mortgages (FRMs) have interest rates that never change unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.
Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.
With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.
Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.
In most other cases, a fixed-rate mortgage is typically the safer and better choice.
Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.
How your credit score affects your mortgage rate
You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.
This is because credit history determines risk level.
Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.
So, for the best rate, aim for a credit score of 720 or higher.
Mortgage programs that don’t require a high score include:
Conventional home loans — minimum 620 credit score
FHA loans — minimum 500 credit score (with a 10% down payment) or 580 (with a 3.5% down payment)
VA loans — no minimum credit score, but 620 is common
USDA loans — minimum 640 credit score
Ideally, you want to check your credit report and score at least 6 months before applying for a mortgage. This gives you time to sort out any errors and make sure your score is as high as possible.
If you’re ready to apply now, it’s still worth checking so you have a good idea of what loan programs you might qualify for and how your score will affect your rate.
You can get your credit report from AnnualCreditReport.com and your score from MyFico.com.
How big of a down payment do I need?
Nowadays, mortgage programs don’t require the conventional 20 percent down.
Indeed, first-time home buyers put only 6 percent down on average.
Down payment minimums vary depending on the loan program. For example:
Conventional home loans require a down payment between 3% and 5%
FHA loans require 3.5% down
VA and USDA loans allow zero down payment
Jumbo loans typically require at least 5% to 10% down
Keep in mind, a higher down payment reduces your risk as a borrower and helps you negotiate a better mortgage rate.
If you are able to make a 20 percent down payment, you can avoid paying for mortgage insurance.
This is an added cost paid by the borrower, which protects their lender in case of default or foreclosure.
But a big down payment is not required.
For many people, it makes sense to make a smaller down payment in order to buy a house sooner and start building home equity.
Verify your new rate. Start here
Choosing the right type of home loan
No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.
The five main types of mortgages include:
Fixed-rate mortgage (FRM)
Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.
The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.
Adjustable-rate mortgage (ARM)
Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.
Your rate and payment can rise or fall annually depending on how the broader interest rate trends.
ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).
For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.
Jumbo mortgage
A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.
In 2023, the conforming loan limit is $726,200 in most areas.
Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.
FHA mortgage
A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.
VA mortgage
A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.
VA loans allow no down payment and have exceptionally low mortgage rates.
USDA mortgage
USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.
Bank statement loan
Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account as evidence of their financial circumstances. This is an option for self-employed or seasonally-employed borrowers.
Portfolio/Non-QM loan
These are mortgages that lenders don’t sell on the secondary mortgage market. And this gives lenders the flexibility to set their own guidelines.
Non-QM loans may have lower credit score requirements or offer low-down-payment options without mortgage insurance.
Choosing the right mortgage lender
The lender or loan program that’s right for one person might not be right for another.
Explore your options and then pick a loan based on your credit score, down payment, and financial goals, as well as local home prices.
Whether you’re getting a mortgage for a home purchase or a refinance, always shop around and compare rates and terms.
Typically, it only takes a few hours to get quotes from multiple lenders. And it could save you thousands in the long run.
Time to make a move? Let us find the right mortgage for you
Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Those mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.
Persistent economic trends that include inflation, a strong labor market and real gross domestic product (GDP) growth will continue to “dampen” mortgage origination activity through at least the end of 2026, according to the newest U.S. mortgage originations outlook from financial services forecasting and advisory company iEmergent.
Based on 2023 Home Mortgage Disclosure Act (HMDA) data, the iEmergent analysis predicts that purchase mortgage volume will rise by roughly 9% in 2024 compared to last year. But this will primarily be driven by larger loan amounts rather than a larger number of originations. Meanwhile, refinance transactions are expected to increase modestly to 18% of all originations, up slightly from a record-low share of 17% in 2023.
In terms of dollar volume, total mortgage originations in 2023 finished at $1.443 trillion, with $1.567 trillion anticipated by the end of 2024. Of that total, $252 billion is expected to come from refinances.
A “mild decline” in GDP growth in 2025 could lead to a softening of both mortgage rates and home prices, leading to slightly higher origination levels and growth in refinance transactions that is tempered by recent historic lows. iEmergent forecasts 2025 originations to be at $1.761 trillion, with $370 billion (or 21%) of the total coming from refinances.
It is not until 2026 that the firm predicts mortgage origination volume will approach 2022 levels, as moderating rates are expected to fuel additional recovery of refinance volume in terms of originations and dollar amounts. The forecast for 2026 currently stands at $2.014 trillion, with 26.7% (or $538 billion) expected to come from refinances.
“The American economy has proven surprisingly resilient, and that very resiliency has kept interest rates higher than anticipated for longer than expected,” iEmergent CEO Laird Nossuli said in the report. “When you factor in an affordability crisis and an acute housing shortage, it’s no wonder origination volumes continue to suffer.
“As economic growth slows over the next couple of years, we could finally see some improvement, provided inventory scarcity is addressed. As markets recover, origination opportunities will be unevenly distributed, making our census-level forecasts a critical tool for shaping lenders’ growth strategies.”
iEmergent’s forecasts through 2026 are more conservative than those of the Mortgage Bankers Association (MBA). According to MBA’s most recent forecast from May 16, the association predicts $1.805 trillion in originations for 2024, followed by $2.084 trillion in 2025 and $2.275 trillion in 2026. The refi share is predicted to be 23.3% ($422 million) in 2024, 28% ($585 million) in 2025 and 28.4% ($646 million) in 2026.
iEmergent’s forecasts are also more conservative than those of Fannie Mae, which predicts volume to be broadly in line with MBA’s forecasts for this year — roughly $1.4 trillion in purchase volume and $368 million in refinance volume. In 2025, Fannie Mae predicts 13% growth in purchase volume for a total volume of $1.939 trillion, with 34% of that volume ($539 billion) being refinances.
Average mortgage rates climbed appreciably last Friday following a surprisingly (if not shockingly) strong jobs report. That day’s rise all but wiped out the falls earlier in the week, sending those rates to their highest level so far this month.
First thing, it was looking as if mortgage rates today might barely budge. But that could change later in the day.
Current mortgage and refinance rates
Find your lowest rate. Start here
Program
Mortgage Rate
APR*
Change
Conventional 15-year fixed
6.565%
6.645%
+0.03
Conventional 30-year fixed
7.05%
7.1%
+0.02
30-year fixed FHA
7.009%
7.052%
+0.26
Conventional 10-year fixed
6.632%
6.713%
+0.02
Conventional 20-year fixed
6.88%
6.935%
+0.06
5/1 ARM Conventional
6.734%
7.896%
-0.03
30-year fixed VA
7.083%
7.126%
+0.24
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Should you lock your mortgage rate today?
I’m truly sorry that my predictions last week of higher mortgage rates imminently turned out to be correct. But my feeling is that markets aren’t ready to deliver a consistent downward trend for those rates and probably won’t be ready to do so until much later in the year. And possibly not even then.
In the meantime, of course, there will be periods of falls as well as rises. And, over time, we can reasonably hope they’ll roughly balance each other out.
I don’t see any point in betting (by floating your rate) when the chances of wining and losing are approximately equal.
So, my personal rate lock recommendations 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
LOCKif closing in 60days
Of course, don’t lock your rate when mortgage rates look likely to fall. My recommendations are based on longer trends. And, within those, there will be rate-friendly days and longer periods that you can take advantage of.
With so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So, let your gut and your own tolerance for risk help guide you.
>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 are mostly compared with roughly the same time the business day before, so much of the movement will often have happened in the previous session. The numbers are:
The yield on 10-year Treasury notes edged up to 4.46% from 4.43%. (Bad for mortgage rates) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were falling this morning. (Good for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices 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 $75.97 from $75.76 a barrel. (Neutral for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices fell to $2,321 from $2,338 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Because gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — Edged down to 42 from 44 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 often 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, post-pandemic upheavals, and war in Ukraine, 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 hardly move. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
Find your lowest rate. Start here
What’s driving mortgage rates today?
Super Wednesday looms
Two of the three events that are most likely to move mortgage rates are due this Wednesday. They’re:
The monthly consumer price index — A crucial inflation report
A six-weekly update from the Federal Reserve on how its plans for future cuts to general interest are evolving. This time, it could be particularly influential because it includes a quarterly Summary of Economic Projections, complete with a highly valued dot plot, as well as a news conference
I’ll brief you tomorrow on what to expect from those. Or, if you’re in a hurry, check out the weekend edition (link below). But they’d need to be exceptionally friendly toward mortgage rates to fully counteract the effects of last Friday’s jobs report.
Today and tomorrow
No economic reports are due today. So any significant change in mortgage rates is likely to be a result of either continuing momentum from last Friday or some unscheduled news story that affects the economy.
Tomorrow may be similarly uneventful. The only report due is an optimism index from the National Federation of Independent Business, and that rarely affects mortgage rates.
Later in the week
We’re due the producer price index (PPI) on Thursday and the import price index (IPI) on Friday. These forward-looking inflation indicators can sometimes affect mortgage rates but usually only temporarily and in a limited way.
And the same goes for two other reports:
Weekly initial jobless claims on Thursday
The consumer sentiment index on Friday
Indeed, I suspect all reports this week will be eclipsed by Wednesday’s events.
If you’re hungry for more information about what’s moving mortgage rates, do click through to the latest weekend edition of this daily report. It provides a deeper analysis together with a preview of what to expect in the coming week. It’s published each Saturday morning soon after 10 a.m. Eastern.
Recent trends
According to Freddie Mac’s archives, the weekly all-time lowest rate for 30-year, fixed-rate mortgages was set on Jan. 7, 2021, when it stood at 2.65%. The weekly all-time high was 18.63% on Sep. 10, 1981.
Freddie’s Jun. 6 report put that same weekly average at 6.99%, down from the previous week’s 7.03%. But note that Freddie’s data are almost always out of date by the time it announces its weekly figures. Still, they’re a good way to track trends.
Expert forecasts for mortgage rates
Looking further ahead, Fannie Mae 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 rate forecasts for the last three quarters of 2024 and the first quarter of 2025 (Q2/24, Q3/24 Q4/24 and Q1/25).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on May 22 and the MBA’s on May 17.
Forecaster
Q2/24
Q3/24
Q4/24
Q1/25
Fannie Mae
7.1%
7.1%
7.0%
6.9%
MBA
6.9%
6.7%
6.5%
6.4%
Of course, given so many unknowables, both these forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
Important notes on today’s mortgage rates
Here are some things you need to know:
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’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
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
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
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.
Find your lowest mortgage rate today
You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:
“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”
In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?
Verify your new rate
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.
How your mortgage interest rate is determined
Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.
Factors that determine your mortgage interest rate include:
Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate
Remember, every mortgage lender weighs these factors a little differently.
To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.
Verify your new rate. Start here
Are refinance rates the same as mortgage rates?
Rates for a home purchase and mortgage refinance are often similar.
However, some lenders will charge more for a refinance under certain circumstances.
Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.
This creates a tidal wave of new work for mortgage lenders.
Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.
In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.
Also, cashing out equity can result in a higher rate when refinancing.
Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.
Check your refinance rates today. Start here
How to get the lowest mortgage or refinance rate
Since rates can vary, always shop around when buying a house or refinancing a mortgage.
Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.
Here are a few tips to keep in mind:
1. Get multiple quotes
Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.
Some simply go with the bank they use for checking and savings since that can seem easiest.
However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.
So get multiple quotes from at least three different lenders to find the right one for you.
2. Compare Loan Estimates
When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.
You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:
Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs
Remember, the lowest interest rate isn’t always the best deal.
Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.
Also, pay close attention to your closing costs.
Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.
3. Negotiate your mortgage rate
You can also negotiate your mortgage rate to get a better deal.
Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.
You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.
And if they’re not, keep shopping — there’s a good chance someone will.
Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?
Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).
Fixed-rate mortgages (FRMs) have interest rates that never change unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.
Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.
With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.
Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.
In most other cases, a fixed-rate mortgage is typically the safer and better choice.
Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.
How your credit score affects your mortgage rate
You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.
This is because credit history determines risk level.
Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.
So, for the best rate, aim for a credit score of 720 or higher.
Mortgage programs that don’t require a high score include:
Conventional home loans — minimum 620 credit score
FHA loans — minimum 500 credit score (with a 10% down payment) or 580 (with a 3.5% down payment)
VA loans — no minimum credit score, but 620 is common
USDA loans — minimum 640 credit score
Ideally, you want to check your credit report and score at least 6 months before applying for a mortgage. This gives you time to sort out any errors and make sure your score is as high as possible.
If you’re ready to apply now, it’s still worth checking so you have a good idea of what loan programs you might qualify for and how your score will affect your rate.
You can get your credit report from AnnualCreditReport.com and your score from MyFico.com.
How big of a down payment do I need?
Nowadays, mortgage programs don’t require the conventional 20 percent down.
Indeed, first-time home buyers put only 6 percent down on average.
Down payment minimums vary depending on the loan program. For example:
Conventional home loans require a down payment between 3% and 5%
FHA loans require 3.5% down
VA and USDA loans allow zero down payment
Jumbo loans typically require at least 5% to 10% down
Keep in mind, a higher down payment reduces your risk as a borrower and helps you negotiate a better mortgage rate.
If you are able to make a 20 percent down payment, you can avoid paying for mortgage insurance.
This is an added cost paid by the borrower, which protects their lender in case of default or foreclosure.
But a big down payment is not required.
For many people, it makes sense to make a smaller down payment in order to buy a house sooner and start building home equity.
Verify your new rate. Start here
Choosing the right type of home loan
No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.
The five main types of mortgages include:
Fixed-rate mortgage (FRM)
Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.
The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.
Adjustable-rate mortgage (ARM)
Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.
Your rate and payment can rise or fall annually depending on how the broader interest rate trends.
ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).
For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.
Jumbo mortgage
A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.
In 2023, the conforming loan limit is $726,200 in most areas.
Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.
FHA mortgage
A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.
VA mortgage
A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.
VA loans allow no down payment and have exceptionally low mortgage rates.
USDA mortgage
USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.
Bank statement loan
Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account as evidence of their financial circumstances. This is an option for self-employed or seasonally-employed borrowers.
Portfolio/Non-QM loan
These are mortgages that lenders don’t sell on the secondary mortgage market. And this gives lenders the flexibility to set their own guidelines.
Non-QM loans may have lower credit score requirements or offer low-down-payment options without mortgage insurance.
Choosing the right mortgage lender
The lender or loan program that’s right for one person might not be right for another.
Explore your options and then pick a loan based on your credit score, down payment, and financial goals, as well as local home prices.
Whether you’re getting a mortgage for a home purchase or a refinance, always shop around and compare rates and terms.
Typically, it only takes a few hours to get quotes from multiple lenders. And it could save you thousands in the long run.
Time to make a move? Let us find the right mortgage for you
Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Those mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.
In an industry in which one mantra has been “survive until ’25,” mortgage originators are likely to have to struggle through not only year but the following one as well, iEmergent said in its latest production forecast.
The same trends that affected 2023 — inflation, real gross domestic product growth, a strong labor market and tight Federal Reserve monetary policy — will hold the housing market back through the end of 2026, said Mark Watson, chief of forecasting at iEmergent, in a press release.
Watson’s update also no longer sees the U.S. going into recession in 2024, bringing him in line with other industry forecasts.
Last August, iEmergent, a mortgage business intelligence firm, predicted between $1.62 trillion and $1.71 trillion for 2023 production. After looking at recent Home Mortgage Disclosure Act data, it pushed that number down to $1.44 trillion.
At that time, it also forecast between $1.69 trillion and $1.79 trillion for this year. The update puts the low point at $1.57 trillion and the high end at $1.62 trillion.
In comparison, the May forecast from the Mortgage Bankers Association found 2023 volume to be $1.64 trillion and the group is now expecting $1.81 trillion to be produced in 2024. At the MBA’s Secondary and Capital Markets Conference, Jeana Curro, managing director at Bank of America said her organization now calls for $1.6 trillion in originations this year, up from $1.38 trillion in 2023.
Fannie Mae’s most recent estimate for last year was $1.47 trillion of volume, in line with iEmergent’s, but it forecasts $1.73 trillion for 2024 volume.
“As economic growth slows over the next couple of years, we could finally see some improvement, provided inventory scarcity is addressed,” iEmergent CEO Laird Nossuli said in the press release. “As markets recover, origination opportunities will be unevenly distributed.”
In its new forecast, iEmergent doesn’t see originations getting back above $1.7 trillion until 2025 and barely topping $2 trillion the following year.
The MBA believes the industry will be above $2 trillion in 2025 (at around $2.1 trillion) and at $2.28 trillion in 2026.
Fannie Mae has only publicly forecast out to next year and it foresees production at just under $2.1 trillion as well.
This year’s gain in dollar volume will be due to higher home sales prices, as iEmergent only thinks units produced will increase by just 400,000 to 4.51 million.
Next year, loans originated will increase to 4.95 million and in 2026, to 5.61 million. The 2026 increase will be on the strength of the refinance market, as the year-over-year gain is estimated to be 500,000 units of loans for that purpose.