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Mortgage Rate Watch

A new home can be the biggest purchase of your life. Before you start looking for the right home, you may want to research your mortgage options.

But not all mortgages are created equal. So, by doing your research beforehand, you can choose the option that best suits your financial situation and potentially puts more money in your pocket. You also know what guidelines to follow when applying.

Types of mortgages

  • Conventional loan – Best for borrowers with a good credit score
  • Jumbo loan – Best for borrowers with excellent credit looking to buy an expensive home
  • Government-insured loan – Best for borrowers who have lower credit scores and minimal cash for a down payment
  • Fixed-rate mortgage – Best for borrowers who’d prefer a predictable, set monthly payment for the duration of the loan
  • Adjustable-rate mortgage – Best for borrowers who aren’t planning to stay in the home for an extended period, would prefer lower payments in the short-term and are comfortable with possibly having to pay more in the future

Conventional loans, which are not backed by the federal government, come in two forms: conforming and non-conforming.

Conforming loans – As the name implies, a conforming loan “conforms” to the set of standards put in place by the Federal Housing Finance Agency (FHFA), which includes credit, debt and loan size. For 2023, the conforming loan limits are $726,200  in most areas and $1,089,300 in high-cost areas.

Non-conforming loans – These loans do not meet FHFA standards. Instead, they cater to borrowers looking to purchase more-expensive homes or individuals with unusual credit profiles.

Pros of conventional loans

  • Can be used for a primary home, second home or investment property
  • Overall borrowing costs tend to be lower than other types of mortgages, even if interest rates are slightly higher
  • Can ask your lender to cancel private mortgage insurance (PMI) once you’ve reached 20 percent equity, or refinance to remove it
  • Can pay as little as 3 percent down on loans backed by Fannie Mae or Freddie Mac
  • Sellers can contribute to closing costs

Cons of conventional loans

  • Minimum FICO score of 620 or higher is often required (the same applies for refinancing)
  • Higher down payment than some government loans
  • Must have a debt-to-income (DTI) ratio of no more than 45 percent (50 percent in some instances)
  • Likely need to pay PMI if your down payment is less than 20 percent of the sales price
  • Significant documentation required to verify income, assets, down payment and employment

Who are conventional loans best for?

If you have a strong credit score and can afford to make a sizable down payment, a conventional mortgage is probably your best pick. The 30-year, fixed-rate mortgage is the most popular choice for homebuyers.

Jumbo mortgages are home loan products that fall outside FHFA borrowing limits. Jumbo loans are more common in higher-cost areas such as Los Angeles, San Francisco, New York City and the state of Hawaii, where home prices are often on the higher end.

Pros of jumbo loans

  • Can borrow more money to purchase a more expensive home
  • Interest rates tend to be competitive with other conventional loans
  • Often the only finance option in areas with extremely high home values

Cons of jumbo loans

  • Down payment of at least 10 percent to 20 percent required in many cases
  • A FICO score of 700 or higher usually required
  • Cannot have a DTI ratio above 45 percent
  • Must show you have significant assets in cash or savings accounts
  • Usually require more in-depth documentation to qualify

Who are jumbo loans best for?

If you’re looking to finance a home with a selling price exceeding the latest conforming loan limits, a jumbo loan is likely your best route.

The U.S. government isn’t a mortgage lender, but it does play a role in making homeownership accessible to more Americans by guaranteeing certain types of loans — thus lessening the risk for lenders. Three government agencies back mortgages: the Federal Housing Administration (FHA), the U.S. Department of Agriculture (USDA) and the U.S. Department of Veterans Affairs (VA).

  • FHA loans – Backed by the FHA, these home loans come with competitive interest rates, and help make homeownership possible for borrowers without a large down payment or pristine credit. You’ll need a minimum FICO score of 580 to get the FHA maximum of 96.5 percent financing with a 3.5 percent down payment.  However, a score as low as 500 is allowed if you put at least 10 percent down. FHA loans require mortgage insurance premiums, which can increase the overall cost of your mortgage. Lastly, with an FHA loan, the home seller is allowed to contribute to closing costs.
  • USDA loans – USDA loans help moderate- to low-income borrowers who meet certain income limits buy homes in rural, USDA-eligible areas. Some USDA loans do not require a down payment for eligible borrowers. There are extra fees, though, including an upfront fee of 1 percent of the loan amount (which can typically be financed with the loan) and an annual fee.
  • VA loans – VA loans provide flexible, low-interest mortgages for members of the U.S. military (active duty and veterans) and their families. There’s no minimum down payment, mortgage insurance or credit score requirement, and closing costs are generally capped and may be paid by the seller. VA loans charge a funding fee, a percentage of the loan amount, which can be paid upfront at closing or rolled into the cost of the loan along with other closing costs.

Pros of government-insured loans

  • Help you finance a home when you don’t qualify for a conventional loan
  • Credit requirements more relaxed
  • Don’t need a large down payment
  • Available to repeat and first-time buyers
  • No mortgage insurance and no down payment required for VA loans

Cons of government-insured loans

  • Mandatory mortgage insurance premiums on FHA loans that usually cannot be canceled
  • FHA loan sizes are lower than conventional mortgages in most areas, limiting potential inventory to choose from
  • Borrower must live in the property (although you may be able to finance a multi-unit building and rent out other units)
  • Could have higher overall borrowing costs
  • Expect to provide more documentation, depending on the loan type, to prove eligibility

Who are government-insured loans best for?

Are you having trouble qualifying for a conventional loan due to a lower credit score or minimal cash reserves for a down payment? FHA-backed and USDA-backed loans could be a viable option. For military service members, veterans and eligible spouses, VA-backed loan terms are often more generous than a conventional loan’s.

Fixed-rate mortgage

Fixed-rate mortgages maintain the same interest rate over the life of your loan, which means your monthly mortgage payment always stays the same. Fixed loans typically come in terms of 15 years or 30 years, although some lenders allow borrowers to pick any term between eight and 30 years.

Pros of fixed-rate mortgages

  • Monthly principal and interest payments stay the same throughout the life of the loan
  • Easier to budget housing expenses from month to month

Cons of fixed-rate mortgages

  • If interest rates fall, you’ll have to refinance to get that lower rate
  • Interest rates typically higher than rates on adjustable-rate mortgages (ARMs)

Who are fixed-rate mortgages best for?

If you are planning to stay in your home for at least five to seven years, and want to avoid the potential for changes to your monthly payments, a fixed-rate mortgage is right for you.

In contrast to fixed-rate loans, adjustable-rate mortgages (ARMs) have interest rates that fluctuate with market conditions. Many ARM products have a fixed interest rate for a few years before the loan changes to a variable interest rate for the remainder of the term. For example, you might see a 7/6 ARM, which means that your rate will remain the same for the first seven years and will adjust every six months after that initial period. If you consider an ARM, it’s essential to read the fine print to know how much your rate can increase and how much you could wind up paying after the introductory period expires.

Pros of ARMs

Lower fixed rate in the first few years of homeownership (although this isn’t a guarantee; as of late, 30-year fixed rates have actually been similar to those for 5/6 ARMs)
Can save a substantial amount of money on interest payments

Cons of ARMs

Monthly mortgage payments could become unaffordable, resulting in a loan default
Home values may fall in a few years, making it harder to refinance or sell before the loan resets

Who are adjustable-rate mortgages best for?

If you don’t plan to stay in your home beyond a few years, an ARM could help you save on interest payments. However, it’s important to be comfortable with a certain level of risk that your payments might increase if you’re still in the home.

Other types of home loans

In addition to these common kinds of mortgages, there are other types you may find when shopping around for a loan:

  • Construction loans: If you want to build a home, a construction loan can be a good financing choice — especially a construction-to-permanent loan, which converts to a traditional mortgage once you move into the residence. These short-term loans are best for applicants who can provide a higher down payment and proof that they can afford the monthly payments.
  • Interest-only mortgages: With an interest-only mortgage, the borrower makes interest-only payments for a set period – usually five and seven years — followed by payments for both principal and interest. You won’t build equity as quickly with this loan, since you’re initially only paying back interest. These loans are best for those who know they can sell or refinance, or for those who can reasonably expect to afford the higher monthly payment later.
  • Piggyback loans: A piggyback loan, also referred to as an 80/10/10 loan, involves two loans: one for 80 percent of the home price and another for 10 percent. You’ll make a down payment for the remaining 10 percent.These loan products are designed to help the borrower avoid paying for mortgage insurance. But piggyback loans require two sets of closing costs, and you’ll also accrue interest on two loans, making this unconventional arrangement these best for those who will actually save money using it.
  • Balloon mortgages: A balloon mortgage requires a large payment at the end of the loan term. Generally, you’ll make payments based on a 30-year term, but only for a short time, such as seven years. When the loan term ends, you’ll make a large payment on the outstanding balance, which can be unmanageable if you’re not prepared or your credit situation deteriorates. These loans are best for those who have the stable financial resources needed to make a large balloon payment once the loan term ends.

 

Mortgage Rates Jump to Highest Levels of The Week
While there was never much of a chance of mortgage rates moving above the levels seen at the beginning of last week, they were easily able to nab the dubious distinction of hitting this week's highest levels today. This is the least surprising thing imaginable after looking at this week's chart of mortgage-backed securities prices. As the caption advises, the lower the line, the higher the implication for mortgage rates.  The weakness was already in the works as of yesterday afternoon, but the market deteriorated further overnight and in the early morning hours for reasons that are esoteric as they are inconsequential.  In the bigger picture, apart from the past 5 days, we're still at the lowest levels in 6 months and we're still waiting for only a few key economic reports to set the tone for rates going forward. 

  Mortgage Rate Watch

 4 days 21 hours ago

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Mortgage Rates Didn't Actually Move Sharply Lower Today
Thursday's mark the release of Freddie Mac's weekly mortgage rate survey.  It's the longest running and most widely cited measure of mortgage rates, but it's not always the most accurate when it comes to tracking day to day changes. In today's case, the survey showed a sharp drop from 6.89 to 6.77.  In actuality, the drop was a bit bigger than that, but it happened last week following Thursday's Consumer Price Index (CPI).  Today's rates are almost perfectly unchanged since the end of last week. At issue is Freddie's methodology which reports a trailing 5 day average of rates each Thursday.  That means that neither Thursday nor Friday's sharply lower rates made it into the calculation last week.  Instead, they're in today's number, and today's mortgage rates won't be counted until next Thursday.  Thanks to the extremely flat trend in rates so far this week, we can agree with Freddie that rates are currently near 6.8% for top tier conventional 30yr fixed scenarios and that these rates are the lowest seen in many months. [thirtyyearmortgagerates]

  Mortgage Rate Watch

 5 days 22 hours ago

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Mortgage Rates Holding Near 5 Month Lows
Despite an active calendar of events that had the potential to cause volatility, average mortgage rates managed to remain unchanged in the morning and to move slightly lower in the afternoon.  Last Thursday's inflation data helped 30yr fixed rates drop to 5 month lows and there hasn't been much movement since then. Technically, today's rates aren't quite back to Monday's levels, but the average borrower would be seeing the same note rate in either case.  The only potential difference would be in terms of upfront costs and even that would be minor. While the economic data so far this week has failed to inspire major rate movement, the forthcoming data still presents some amount uncertainty.  Thursday brings weekly Jobless Claims data.  This typically doesn't have a big influence, but there's heightened focus on labor market reports right now because signs of labor market weakness would further tip the scales in favor of a Fed rate cut. The Fed is currently expected to cut rates for the first time this cycle in September.  There's a very high bar for them to consider a July rate cut--almost certainly too high for any of the scheduled economic data to make a difference between now and then.  Nonetheless, the Fed Funds Rate doesn't directly dictate day to day changes in other rates.  If the data increases the case for September's cut or if it strengthens the case for additional cuts after that, we could still see a favorable response in the short term. Conversely, if the data improves, rates could undergo a modest correction as they wait for the next big jobs report in early August.

  Mortgage Rate Watch

 6 days 22 hours ago

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Mortgage Rate Winning Streak Finally Ends, But Just Barely
When is a defeat not really a defeat?  Mortgage rates have an idea.  They're fresh off an incredibly rare 8 day winning streak that took the average 30yr fixed rate to the lowest levels in 5 months AND well under the 7% mark for top tier scenarios. Contrast all that gloriousness to today's performance which saw the average inch higher by a mere 0.03%.  On any recent day before last Friday, we'd still be at 5 month lows.  It would be just as fair to say rates are "holding their ground near 5 month lows" in the bigger picture. This wasn't necessarily destined to be the case this morning.  The important Retail Sales report had some underlying components that caused the bond market to move quickly toward higher yields (thus implying a bigger uptick in mortgage rates).  But the losses were temporary and traders were quick to push bonds back into stronger territory. Some mortgage lenders ended up offering mid day improvements to the morning's rate offerings.  Those who didn't would likely be able to improve rates tomorrow morning IF the bond market were to hold in line with current levels overnight (never a guarantee, but always the 'all other things being equal' baseline).

  Mortgage Rate Watch

 1 week ago

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Mortgage Rates' Impressive Winning Streak Faces Increasing Resistance
We occasionally reference 5 day winning streaks for mortgage rates as the sort of uncommon occurrence that greatly increases the odds of at least a temporary pullback.  Longer streaks do happen, but odds of a pullback increase sharply after 8 days. With all that in mind, today marked the 8th straight day of improvement in mortgage rates. Does this mean we're destined to see rates move higher tomorrow?  Not necessarily.  First off, we can never be sure we're destined to see any particular outcome when it comes to the simple question of whether rates will move higher or lower over such a definite time frame. Perhaps more interesting is the fact that the underlying bond market (rates are a factor of bond prices) has already seen a mild pullback that began shortly after last Thursday's inflation data.  It was just mild enough that the average mortgage lender was able to avoid increasing rates since then. Last but not least, rather than rely on precedent in the absence of context, we should consider that rates have been responsive to a small group of important economic reports.  While it's not on the same level as last week's inflation data, tomorrow's Retail Sales data is one such report.  Simply put, there's no magic rule that would preclude a 9 day winning streak if Retail Sales happened to fall far enough below forecasts.  Conversely, if the data is surprisingly strong, rates would likely rise and it would have nothing to do with the low odds of 9 day winning streaks.

  Mortgage Rate Watch

 1 week 1 day ago

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Mortgage Rates Shrug Off Seemingly Threatening Inflation Data to hit 5 Month Lows
Yesterday was all about the CONSUMER Price Index (CPI), which helped mortgage rates drop at the 2nd fastest pace of the year.  Today brough the PRODUCER Price Index (PPI), and the message was a bit different. While PPI is not in the same league as CPI in terms of its impact on rates, there have been several recent examples that have left a mark on the market, for better or worse.  When this morning's installment came out, it looked like we'd have another example to count, and not the good kind. Between the new headline and the revision to last month's numbers, annual PPI ended up a half a percent higher than the market expected. If that sort of thing happened in CPI, rates would absolutely skyrocket. Even though it was a PPI problem, it still would not have been a surprise to see at least SOME upward pressure today. But instead, rates managed to move LOWER, albeit not by much.  Still... any improvement in the wake of such numbers requires an explanation.  In this case, it came down to the underlying components of the PPI data not translating to the consumer-facing inflation metrics that guide rate policy.   In other words, sometimes higher PPI suggests upward pressure on the PCE inflation data (the broadest national measure of consumer inflation and the most closely-watched by the Fed), but today's report did not.  Bonds initially panicked for a split second, but then eased into modestly stronger territory and stayed there all day without any drama.

  Mortgage Rate Watch

 1 week 4 days ago

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Mortgage Rates Drop Sharply After Inflation Data
Rates were prepared to make a big move in one direction or the other heading into today's high stakes inflation data.  Fortunately, the Consumer Price Index (CPI) came in quite a bit lower than expected, leading to a sharp decline in rates at the average lender.   30yr fixed rates had already trickled back below 7% yesterday.  Today's drop saw them surge easily under 6.90%, making for the 2nd largest single day drop so far this year.  The improvement also adds to the case that rates are in a downtrend after their last major peak in late April. CPI is the first major national inflation reading for any given month.  Investors focus more on the "core" which excludes food and energy.  Month over month core CPI needs to average .17 over 12 months to hit the Fed's 2% inflation target.  Last month's report was promising because that number fell to .163--the lowest since 2021 at the time. Today's core CPI reading was markedly lower, dropping all the way to 0.065.  Other components of the report, such as the closely watched housing expense metrics saw even larger drops relative to their recent range.  Housing inflation has been a problem for the broader CPI measurements and this is the first report that shows the shift that the market has been waiting for. While this is the most promising inflation data we've seen in years, and while it is made even more promising by adding on to last month's lower readings, these are still only 2 consecutive months of good news.  We've arguably seen 2 months of good news in the past only for things to turn back around.  Granted, that's less likely this time, but the Fed and the market can't quite bet on it just yet.  Otherwise, today's rate drop would have been even bigger.

  Mortgage Rate Watch

 1 week 5 days ago

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Mortgage Rates Tick Back Below 7.0%, But Just Barely
Mortgage rates have been in a narrow range for more than a month now with the average top tier 30yr fixed rate staying within striking distance of the 7.0% mark for the entirety. The number was 7.01 yesterday and it's down to 6.99 today.  This matches the level last seen on June 14th and you'd have to go back to March to see anything much lower. Despite the incredibly uneventful performance of the past month, rates face another opportunity for (or "threat of") a much bigger change tomorrow.  The direction of the move will depend entirely on the results of the Consumer Price Index (CPI). CPI is the most important economic report as far as rates are concerned because it's the first major look at inflation data on any given month and inflation is the biggest problem for rates at the moment.  Looked at another way, the Fed has repeatedly communicated that rate cuts will happen when CPI suggests inflation is decidedly heading back to 2.0% in year over year terms.  The last CPI was a step in the right direction.  If tomorrow's follows suit, the conversation about rate cuts would get serious. The Fed doesn't directly dictate mortgage rates, but the entire rate market tends to react to the same things the Fed says it will react to.   As always, keep in mind that data can go both ways.  If CPI shows higher inflation than expected, rates could move higher just as quickly as they could drop.  Last but not least, there's always a chance that the data and the market's reaction to it can be balanced enough to "thread the needle" (i.e. another day without much change in rates).  

  Mortgage Rate Watch

 1 week 6 days ago

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Mortgage Rates Barely Budge, But That Will Change Soon
Mortgage rates are based on movement in the bond market and bonds haven't been moving much over the past 3 days.  That's resulted in very little change in the average mortgage rate from one day to the next, and zero change today.   Bonds can be inspired by a number of events and data points.  In the past, scheduled congressional testimony with the Fed Chair has been just such an event, but it was not a major consideration today.  Fed Chair Powell reiterated the same messages heard from multiple Fed speakers. The most basic and important message about interest rates is that they depend on economic data.  Some data is more important than other data in that regard and Thursday's Consumer Price Index (CPI) is arguably the most important.  With that in mind, it's not hugely surprising to see bonds and rates holding a more narrow range as they wait to see the outcome of CPI.  Some movement between now and then is certainly possibly, but after CPI comes out, movement is all but guaranteed, for better or worse.

  Mortgage Rate Watch

 2 weeks ago

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Mortgage Rates Gently Lower to Begin New Week
Apart from July 1st, mortgage rates have fallen every day so far this month.  The counterpoint is that only adds up to 4 business days so far.  The other counterpoint is that the improvements have been fairly modest over the past two days with the average borrower still likely to be quoted the same interest rate seen on Friday.  The average top tier conventional 30yr fixed rate remains just a hair over 7%.  If that's to change in a meaningful way, it would likely involve this Thursday's Consumer Price Index (CPI) data.  CPI has been the most important input for rates as far as economic reports are concerned.  Thursday's is an exciting installment as it has a chance to confirm a promising shift seen in last month's data. If confirmed, rates should move easily into the 6's. Between now and then, there are other potential sources of volatility, including 2 days of Congressional testimony from Fed Chair Powell.  But CPI is ultimately a much bigger consideration than anything Powell might say.

  Mortgage Rate Watch

 2 weeks 1 day ago

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Mortgage Rates End Week Lower Thanks to Jobs Report
The average top tier 30yr fixed rate may not be back under 7% just yet, but as of Friday, it is back below the levels seen last Friday.  That fact is at odds with major weekly rate surveys which showed a somewhat significant increase, but those surveys came out before today's jobs report. Officially known as The Employment Situation, the jobs report is one of the two most important pieces of scheduled monthly economic data in the U.S.  Econ data is always important, but that's doubly true these days as the Fed and the market waits for confirmation that economic growth and inflation are slowing down enough for the Fed to cut rates.   The market often moves well in advance of the Fed when it comes to rates.  Today's jobs report wasn't especially weak, but it represented an obvious downshift compared to last month's installment.  The bond market agreed as traders pushed yields moderately lower in the AM hours. Bonds dictate mortgage rates.  Falling yields coincide with falling mortgage rates.  Again, today's move wasn't big, but it was important in the sense that it leaves the door open for another major economic report to send an even clearer message about progress toward the Fed's rate cutting goals.  That report--the Consumer Price Index (CPI)--comes out next Thursday morning.

  Mortgage Rate Watch

 2 weeks 4 days ago

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Mortgage Rates Move Lower After Weak Service Sector Report
"Data dependent" is one of the most common phrases heard from the Federal Reserve these days when it comes to rate-setting policy.  And while the Fed doesn't directly dictate mortgage rates, the bond market tends to trade the same data that the Fed cares about. Today's key report, the ISM Services index, isn't quite at the top of the Fed's list, but it's a longstanding market mover when it comes to bonds and, thus, rates. Today's installment was much weaker than expected.  Weak data correlates with lower rates, all other things being equal. Bonds improved immediately after the release.  This allowed mortgage lenders to set lower rates today.  Some lenders had already published their initial rates for the day and several of them ended up issuing positive reprices before the end of the day. The bond market is closed tomorrow for the holiday, but will be back to digest an even more important economic report on Friday morning: the big jobs report.

  Mortgage Rate Watch

 3 weeks ago

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Mortgage Rates Finally Find a Ceiling, For Now
As is often the case with internet headlines these days, the headline overstates the reality on the ground--or at least over-dramatizes it.  Considering the last notable "ceiling" was seen less than a month ago and that the last short term ceiling, less than a week ago, the word "finally" probably doesn't apply.  And then there's the word "ceiling" itself.  In this case, it's used only because there isn't one convenient word to say "a day where mortgage rates moved at least slightly lower after 2 or more days spent moving noticeably higher."   In other words, that happened today. It's refreshing or reassuring any time rates stop moving higher after a somewhat abrupt jump remains in place for more than a day.  In the current case, the past two days merely look like slightly bigger continuations of a gentle uptrend in rates that's been in place since mid June. From here, economic data will take center stage with important reports on each of the remaining two mornings of this week (Thursday is closed for Independence Day). Of those, it's Friday's jobs report that has far more power to cause volatility.

  Mortgage Rate Watch

 3 weeks ago

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Mortgage Rates Near Highest Levels in More Than a Month
Mortgage rates continued their frustrating and somewhat perplexing move higher today, thus bringing the average lender close to the highest levels since the end of May.  Rising rates are always frustrating for those the housing/mortgage markets and prospective borrowers, but an ebb and flow is a way of life.  In other words, it's perfectly normal to see good and bad days for rates. Less normal is the occasional emergence of counterintuitive rate movement.  In other words, we are usually able to tie any given drop or surge in rates to one or more root causes that have had similar impacts in the past.   This time around, however, the economic data has been suggesting DOWNWARD pressure on rates over the past two days.  That's notable for two reasons: economic data has been a reliable source of guidance and, more importantly, rates have experienced anything but downward pressure over the past two days! There are a few ways to account for the paradox, but at this point, most conversations include some speculation about the political impact on rates after last week's presidential debate.  Connecting the dots from those conclusions to the market movement is a rather complex task and it relies on several assumptions that can't be predicted with a high degree of certainty.  As such, we'll dig deeper in the event the narrative continues causing problems for rates.  For now, just be aware that it may be a source of counterintuitive pressure, but one that should still be trumped by the major upcoming economic reports.

  Mortgage Rate Watch

 3 weeks 1 day ago

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Mortgage Rates Are Actually Higher This Week
The week began with a distinct absence of interest rate volatility, but things changed in a big way by Friday--at least compared to the previous week which was exceptionally quiet.  In the bigger picture, however, it was just another week that felt volatility in the short term due to a surprising rate spike on Friday. Incidentally, the fact that this week's rate spike occurred at the end of the week means that Freddie Mac's weekly mortgage rate index missed detecting the shift.  More timely daily data shows average mortgage rates trending slightly higher this week as opposed to lower. The most eagerly anticipated data was the PCE price index for May.  This is a similar measure of inflation to CPI (the Consumer Price Index) that came out 2 weeks ago.  Core PCE, which excludes more volatile food and energy prices, was even more favorable for the inflation outlook. The chart above may make it seem that inflation has returned to the target level, but success is measured by the year over year numbers hitting 2%.  The Fed has indicated it would consider rate cuts when it was more confident about hitting 2%.  We're definitely not there yet, but arguably getting closer. Friday afternoon saw an abrupt reversal in rates tied to the compulsory trading that often creates volatility at the end of a month/quarter (Friday was both).  There is no rhyme or reason to month-end trading when it comes to a typical impact.  In other words, it can be good or bad for rates.  We don't get to know ahead of time.  This time it was bad.

  Mortgage Rate Watch

 3 weeks 4 days ago

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Mortgage Rates Steady to Slightly Lower
Mortgage rates rose at the fastest pace in 2 weeks yesterday, but that wasn't a very tall order considering an almost perfect absence of movement leading up to that.  Now today, a good amount of that small amount of damage has been undone. Bonds responded favorably to this morning's economic data, which suggested the labor market could be in the process of softening a bit, and that companies were less likely than expected to make big purchases in May (not including aircraft and defense spending). Bonds thrive on bad news for the economy (and bonds drive interest rates).  While this wasn't the worst news in the world, it was far enough from forecasts to spur a modest rally in bonds and rates.   The top tier conventional 30yr fixed average remains just a hair over 7% for most lenders.  Bigger changes are possible in the coming days/weeks as more important economic data will be released. 

  Mortgage Rate Watch

 3 weeks 5 days ago

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Mortgage Rates Moving Up a Bit
After operating in an exceptionally narrow range since the beginning of last week, mortgage rates finally started doing something a bit different today.  Unfortunately, the differences result in a more noticeably move higher. Rates often respond to major economic data and other important developments that have a bearing on the bond market (rates are ultimately primarily a function of bond trading levels).  That said, there were no great examples of the typical "important developments" behind today's move.  That's one of the reasons that the move was fairly small relative to other notable examples. Top tier conventional 30yr fixed rates only moved up a few hundredths of a percent and not every borrower would see much of a difference from yesterday.  The next two days bring data and events that stand a bit better chance of inspiring a reaction, but we don't really get to the biggest risks/opportunities until the first two weeks of July.

  Mortgage Rate Watch

 3 weeks 6 days ago

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The Miraculously Sideways Streak Continues
Mortgage rates have been flatter than the earth according to the flat earth society.  Much like the actual earth in many areas in the middle of the country--and especially Florida--things can be flat for as far as the eye can see, but the farther one moves along, the more they'll see the contour. For now, though, mortgage rates are in Florida (or IL, ND, MN, etc...).  Conventional 30yr fixed rates inched up 0.01% from yesterday--effectively unchanged and in the same tight range of 7.01 to 7.04 seen since last Monday. Much like the actual geology of the planet, this isn't a conspiracy.  It's just the way things are relative to what we can see around us.  It will change, but not until markets are forced to confront mountains of more important economic data and events.   Tomorrow's events have only a slightly better chance of forcing the bond market (and thus, mortgage rates) to make bigger moves.  Friday continues to be the biggest risk/opportunity, but it's really the following 2 weeks of data that are almost certainly destined to deliver peaks and valleys.

  Mortgage Rate Watch

 4 weeks 1 day ago

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Mortgage Rates Remain Exceptionally Flat for 4th Straight Day
Most mortgage lenders offer mortgage rates in increments of 0.125% (i.e. 6.875, 7.0, 7.125, 7.25, etc.).  As such, a particularly notable day of mortgage rate movement is one in which we see close to a 0.125% change.  After all, that's what it would take for the average borrower to see a significant change in the prevailing rate quote. This doesn't mean smaller moves don't hurt, only that they tend to impact implications for upfront costs rather than the quoted rate itself.  Specifically, last Monday, when rates jumped from 6.99% to 7.04%, the average borrower would be quoted a rate of 7.00% in both cases, but on the 7.04% day, closing costs would have been higher, all other things being equal.  With all of the above in mind, ever since last Monday, the average top tier conventional 30yr fixed rate hasn't moved mover than 0.02% on any single day and for the past 3 days, not more than 0.01%.  That's a staggering level of "sideways-ness."  It hasn't been for a lack of potential motivations either.  During that time, several economic reports were released that have managed to cause much bigger reactions in the past.  If they didn't this time, it's because the market is eagerly waiting for confirmation (or lack thereof) that the most recent round of inflation data is signaling a shift that allows rates to continue moving lower.   That data only comes out every so often, and only once a month in the case of the most important inflation report: the consumer price index (CPI).  We're still several weeks away from that one, but some of the other data is up to the task of causing some volatility between now and then.  The only catch is that almost all of it arrives next week.

  Mortgage Rate Watch

 4 weeks 1 day ago

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June Shaping Up Nicely, But Bigger Tests Are Yet to Come
After a rocky start to the year, things began to improve for rates and the inflation outlook in May. June took the improvement to the next level, but this week didn't affect the bigger picture. Ahead of Wednesday's market closure for Juneteenth, the most relevant economic report was Retail Sales on Tuesday morning.  It came in slightly below forecast and the previous month was revised lower.   Rates responded by moving back toward recent lows, but not below them. Some sources suggest mortgage rates are in fact at multi-month lows, but this relies on Freddie Mac's weekly survey which is notorious for modest inconsistencies with reality due to the timing and methodology of the survey.  In both 10yr Treasury yields and mortgage rates, the reality has been more of a sideways fizzle as opposed to additional improvement. Apart from Retail Sales, Friday's PMI data from S&P Global caused the most notable market reaction after coming in at the strongest levels in more than 2 years--albeit, just barely. Stronger economic data tends to coincide with rates moving up.  Using 10yr Treasury yields as a convenient intraday benchmark for mortgage rate momentum, we can see the impact relative to Retail Sales earlier in the week.  Neither were remotely on the scale of last week's CPI data.  Additionally, they each argued opposite cases, thus helping the rate range remain subdued for now. In other words, most of June's progress was already in place before this week began.  It gets rates within striking distance of a longer term uptrend--one that will be hard to definitively break unless June's forthcoming economic data paints a picture of economic weakness and lower inflation.  It will be several weeks before most of June's data starts coming in.

  Mortgage Rate Watch

 1 month ago

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