Mortgage and refinance rates today, Apr. 29, and rate forecast for next week

Today’s mortgage and refinance rates

Average mortgage rates nudged moderately lower yesterday. And they ended this week a little lower than they started it. Looking at the month, they’re almost identically placed in these closing days of April to where they were near the end of March.

I’m hoping next week will be either quiet or good for mortgage rates. But the monthly jobs report is due next Friday. And that — and countless other forces waiting in the wings — could undermine that hope.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

I see more grounds for optimism than pessimism over mortgage rates next week. Economists expect the jobs report to show continuing slackening in the labor market. And there’s a real possibility of another banking crisis.

And I reckon mortgage rates are more likely to fall than rise for some months to come, too. But this is a balance-of-probabilities thing and there are no certainties.

Still, for now, my personal rate lock recommendations remain:

• LOCK if closing in 7 days
• LOCK if closing in 15 days
• FLOAT if closing in 30 days
• FLOAT if closing in 45 days
• FLOAT if closing in 60 days

However, 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.

What’s moving current mortgage rates

The bigger picture

Mortgage rates have moved sideways this month. But it hasn’t felt like it a lot of the time.

We’ve seen extended periods of rises as well as falls. And there have been plenty of times when I’ve worried that my rate lock recommendations (above) might harm readers’ interests. So, I’m relieved that it really hasn’t mattered — so far — whether you locked or floated your rate in April.

I still believe that lower mortgage rates later in the year are a strong possibility. But there are no guarantees in these matters.

Threats

Debt limit

The biggest threat to lower mortgage rates is probably the debt ceiling. During the week, the Republican-controlled U.S. House of Representatives narrowly passed a bill that would see the debt limit raised by a limited amount.

But that amount requires government spending cuts of 14% over the next decade. It also rolls back some of the president’s signature programs.

And it’s unlikely the Democrat-controlled White House and Senate will buy any of that. So, we’re currently at an impasse.

What might happen if the debt limit binds

A failure to raise the debt limit by the early summer would threaten the nation with financial armageddon. Here’s the Council on Foreign Relations’ (CFR) take on the consequences [my emphases]:

“Potential repercussions of reaching the ceiling include a downgrade by credit rating agencies, increased borrowing costs for businesses and homeowners alike, and a drop-off in consumer confidence that could shock the U.S. financial market and tip the economy into recession. Goldman Sachs economists have estimated that a breach of the debt ceiling would immediately halt about one-tenth of U.S. economic activity. According to center-left think tank Third Way, a breach that leads to default could cause the loss of three million jobs, add $130,000 to the cost of an average thirty-year mortgage, and raise interest rates enough to increase the national debt by $850 billion. In addition, higher interest rates could divert future taxpayer money away from much-needed federal investments in such areas as infrastructure, education, and health care.”

A failure to raise the debt limit would probably, as the CFR suggested, send mortgage rates shooting higher for months or even years. True, they will probably fall back eventually and to very low levels as the consequential prolonged recession or depression bites.

Unknown unknowns

Speaking about the Iraq War, then-Defense Secretary Donald Rumsfeld once famously said:

“There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.”

Well, that applies to the economy — and therefore mortgage rates — as much as it does to war. When you look forward to predict what might happen soon, you’re always aware that there could be unknown unknowns hidden from view.

And you try to weigh the chances of each known unknown. For example, will there be a debt ceiling crisis, what might its economic consequences be, and how might it affect mortgage rates? The same goes for a possible or likely recession later this year.

Even the known knowns can be treacherous. We’ve learned how markets typically react to new sets of data. But sometimes, unfathomably, they react perversely.

Opportunities

I just mentioned the possibility — or perhaps probability — of a recession later this year. And I’m pinning my hopes for lower mortgage rates on that.

Of course, nobody wants a recession. They cause joblessness, financial harm and misery for many Americans. But there’s a strong correlation between recessions and low mortgage rates.

Next week

The two monthly economic reports that currently most influence mortgage rates are the consumer price index and the jobs report, aka the employment situation report. And next Friday brings the jobs report.

It’s good for mortgage rates when it shows the labor market tightening, meaning fewer jobs created during a month compared to previously. And that’s what economists are expecting when April’s report is published on Friday.

Economists polled by MarketWatch forecast 180,000 new jobs in April, down from 230,000 in March. As recently as January, that figure was north of half a million. A significantly lower number than 180,000 should normally pull mortgage rates downward but a higher one could push those rates upward.

It’s worth mentioning the March job openings and labor turnover survey (JOLTS), which lands next Tuesday. That’s often overlooked, but it’s possible that it won’t be this time with so much focus on employment.

The other big event next week is the Federal Reserve’s next rates announcement on Wednesday. Markets are expecting a modest 25-basis-point (0.25%) hike. And that should barely affect mortgage rates.

But, in the unlikely event of a larger increase, that might push those rates higher while no increase at all could see mortgage rates tumble.

Economic reports next week

See above for information about the jobs report and the Fed’s rate announcement.

Those reports that are potentially important for mortgage rates are shown in bold in the following list. The others rarely move those rates far unless they contain shockingly good or bad data.

• Monday — April purchasing manager indexes (PMIs) for the manufacturing sector from the Institute for Supply Management (ISM) and S&P. Plus March construction spending
• Tuesday — March job openings and labor turnover survey (JOLTS). And factory orders for the same month
• Wednesday — Fed rate announcement. Plus April PMIs for the services sector from the ISM and S&P. Also, the April ADP employment report
• Thursday — Productivity in the first quarter. Plus initial jobless claims for the week ending April 29
• Friday — April employment situation report

Watch out on Wednesday and Friday!

Time to make a move? Let us find the right mortgage for you

Mortgage interest rates forecast for next week

I’m optimistic that mortgage rates might have a good week next week. But plenty of things could undermine that prediction.

Still, further ahead, I’m still hopeful that mortgage rates could fall back appreciably.

How your mortgage interest rate is determined

Mortgage and refinance rates are generally determined by prices in a secondary market (similar to the stock or bond markets) where mortgage-backed securities are traded.

And that’s highly dependent on the economy. So mortgage rates tend to be high when things are going well and low when the economy’s in trouble. But inflation rates can undermine those tendencies.

Your part

But you play a big part in determining your own mortgage rate in five ways. And you can affect it significantly by:

1. Shopping around for your best mortgage rate — They vary widely from lender to lender
2. Boosting your credit score — Even a small bump can make a big difference to your rate and payments
3. Saving the biggest down payment you can — Lenders like you to have real skin in this game
4. Keeping your other borrowing modest — The lower your other monthly commitments, the bigger the mortgage you can afford
5. Choosing your mortgage carefully — Are you better off with a conventional, conforming, FHA, VA, USDA, jumbo or another loan?

Time spent getting these ducks in a row can see you winning lower rates.

Remember, they’re not just a mortgage rate

Be sure to count all your forthcoming homeownership costs when you’re working out how big a mortgage you can afford. So, focus on your “PITI.” That’s your Principal (pays down the amount you borrowed), Interest (the price of borrowing), (property) Taxes, and (homeowners) Insurance. Our mortgage calculator can help with these.

Depending on your type of mortgage and the size of your down payment, you may have to pay mortgage insurance, too. And that can easily run into three figures every month.

But there are other potential costs. So, you’ll have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repairs and maintenance costs. There’s no landlord to call when things go wrong!

Finally, you’ll find it hard to forget closing costs. You can see those reflected in the annual percentage rate (APR) that lenders will quote you. Because that effectively spreads them out over your loan’s term, making that rate higher than your straight mortgage rate.

But you may be able to get help with those closing costs and your down payment, especially if you’re a first-time buyer. Read:

Down payment assistance programs in every state for 2023

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 result is a good snapshot of daily rates and how they change over time.