Mortgage and refinance rates today, May 27, and rate forecast for next week

Today’s mortgage and refinance rates

Average mortgage rates rose only modestly yesterday. However, the last two weeks have been terrible. According to Mortgage News Daily’s archive, the average rate for an excellent borrower wanting a 30-year, fixed-rate mortgage climbed to 7.14% yesterday from 6.67% 14 days earlier.

There are a couple of events next week that could lower mortgage rates. But they might just as easily push them higher. And, on balance, I expect mortgage rates to rise over the coming seven days.

All markets are closed on Monday for Memorial Day. So, we’ll be taking a break from the usual daily report. But we’ll be back next Tuesday morning.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

I changed my personal rate lock recommendations (below) again earlier this week. The debt ceiling crisis — and the sharply higher mortgage rates that could bring — were too threatening not to.

There’s more hope now of the debt ceiling being resolved. But there are still plenty of dangers.

So, my recommendations are:

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

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

Everything that can go wrong for mortgage rates seems to be doing so. It’s looking more likely than not that the Federal Reserve will hike general interest rates on Jun. 14 — and perhaps later in the year, too.

And the debt ceiling crisis is yet to be resolved. However, there is some good news on that front.

Let’s dig a little deeper into each of those …

The Fed

This time last week, I reported that “82.6% of investors still believe the Fed will hold rates steady” at its next meeting, according to the CME FedWatch tool. This morning, that tool told a very different story. It now shows only 35.8% of investors still sharing that view. And 64.2% expecting a 25-basis-point (0.25%) rise.

What happened? This week’s economic data have shown both the economy and inflation to be more resilient than expected.

Following yesterday’s personal consumption and expenditures report for April, today’s Wall Street Journal has the headline, “U.S. Consumer Spending Jumped in April and Inflation Accelerated.”

Good news about the economy tends to push mortgage rates higher. And yesterday’s wasn’t the only economic report of the week to deliver that.

Gross domestic product during the third quarter was revised upward, durable goods orders and new home sales were up in April, and a couple of May purchasing managers’ indexes were better than expected. That’s great for everyone — except those who want lower mortgage rates.

Note that the bond market that largely determines mortgage rates won’t wait to react to the likelihood of further Fed rate hikes until Jun. 14. We’re seeing it do so now.

And, if a 0.25% general rate hike has been baked in by then and one occurs as expected, mortgage rates might barely move on the day.

The debt ceiling

There was a bit of good news yesterday on the debt ceiling front. Treasury Secretary Janet Yellen announced that the federal government would probably run out of the funds necessary to settle all its bills on Jun. 5.

What’s good about that? Well, she had previously estimated that point (the “X-date,” in financial jargon) could have been reached on Jun. 1.

So, Congress and the White House may have an extra four days to reach a deal and enact the necessary legislation.

Will that make a difference? We’ll soon find out.

But let’s hope so. Because most economists are predicting a domestic and global economic Armageddon if America defaults on its debts.

And one of the consequences is very likely to be skyrocketing mortgage rates.

Next week’s employment report

The monthly employment situation report (aka the jobs report) is due next Friday. And it is one of the Big 3 economic reports each month, so potentially highly influential for mortgage rates.

Friday’s will cover May. And, overnight, economists polled by MarketWatch were expecting:

• Fewer new jobs to have been created that month — 188,000 in May compared to 253,000 in April
• The unemployment rate to tick up — To 3.5% from 3.4%
• Increases in hourly wages to slow — To 0.3% from 0.5%

If Friday’s actual figures are worse than expected, mortgage rates might fall. If they’re better, those rates might rise. But, if the forecasts are spot on, mortgage rates might barely move in response.

Economic reports next week

So, now you know about next week’s big report. But what about others?

Well, they wouldn’t usually affect mortgage rates much. But markets are especially sensitive to data at the moment so it’s possible those rates will be buffeted by usually less significant reports.

Markets are also listening closely to public remarks from senior Fed figures. And there are three speaking engagements for these next week.

Here are the major economic reports that will appear next week. Those most likely to affect mortgage rates are in bold. Others probably won’t have much impact unless they contain shockingly good or bad data.

• Monday — Memorial Day, so none
• Tuesday — April S&P Case-Shiller home price index and May consumer confidence index
• Wednesday — April job openings and labor turnover survey (JOLTS). Plus ADP employment report (sometimes seen as a bellwether for Friday’s jobs report)
• Thursday — May purchasing manager indexes for the manufacturing sector from S&P and the Institute for Supply Management (ISM). Plus initial jobless claims for the week ending May 27
• Friday — May jobs report, including nonfarm payrolls, unemployment rate and hourly wages

Friday’s jobs report is by far the most important data due next week. But other reports might surprise.

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

Mortgage interest rates forecast for next week

Mortgage rates might fall over the next seven days. But only if both the debt ceiling is raised and the jobs report is worse than expected.

Personally, I’m not that optimistic and suspect that mortgage rates might rise next week.

But, as always, nobody can be sure what the future will bring.

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.