Mortgage and refinance rates today, May 13, and rate forecast for next week

Today’s mortgage and refinance rates

Average mortgage rates moved higher both yesterday and over the last seven days. They have been moving within a very narrow range recently. But that does not mean they won’t break free of that range sometime soon.

I suspect mortgage rates might rise moderately next week. However, there are plenty of unpredictable forces that could undermine that prediction.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

I’m relatively optimistic about mortgage rates over the next few weeks. However, there are some crucial threats that could send them higher.

So, you should see the present as a period of heightened uncertainty. 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

Threats

Earlier, I mentioned threats that could drive mortgage rates higher. There are two main ones of these.

And by far the most worrying is the debt ceiling. Nobody knows for sure what this might mean for the economy, but the majority of mainstream economists believes that it will bring economic catastrophe.

Treasury Secretary Janet Yellen has said the federal government could run out of money to pay all its bills as soon as Jun. 1, which is uncomfortably soon. But markets are unlikely to wait until that crunchtime (“X-date”) before moving in anticipation of the crisis.

When they do move, the reaction could be sharp and rapid. Absent a resolution, we could see stock markets plunge and all borrowing costs (including mortgage rates) soar.

It’s probably more likely than not that the politicians involved will sort out the issue before the X-date. However, if they fail to do so, we could see higher mortgage rates within days or a few weeks.

The Federal Reserve

Immediately after the last meeting of the Federal Reserve’s rate-setting committee, top Fed officials dropped strong hints that a pause in its rate-hiking program was likely. More recently, some of those officials have been saying that further interest rate increases might still be on the cards.

If those hawkish officials get their way, that would likely be bad news for mortgage rates. But this is a more distant threat than the debt ceiling.

General outlook

Besides those threats, the outlook for mortgage rates isn’t at all bad. Inflation continues to moderate. And an increasing number of economists is expecting a recession later in the year.

So, Im hoping we’ll avoid the threats outlined above and can look forward to lower mortgage rates soon.

Next week

By far the most important item on next week’s calendar are retail sales figures for April. Those appear on Tuesday and I’ll cover them in more detail on Monday.

Besides that economic report, the biggest influence on mortgage rates over the next seven days may be speaking engagements and public appearances by senior Fed officials, including Fed Chair Jerome Powell. Investors will be listening for further clues about whether they should expect further rate hikes.

Economic reports next week

Next week’s crucial economic report lands on Tuesday. Its retail sales for April.

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.

• Tuesday — April retail sales. Plus industrial production and capacity utilization for the same month
• Wednesday — April housing starts and building permits
• Thursday — Initial jobless claims for the week ending May 13

Watch out for Tuesday. But don’t forget the many Fed officials who will be speaking in public next week.

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

Mortgage interest rates forecast for next week

I suspect that mortgage rates might move higher next week, if only in response to the looming debt ceiling crisis.

Assuming that crisis is averted and inflation continues to moderate, I’m optimistic that we could see lower mortgage rates soon.

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.