Mortgage and refinance rates today, Jun. 3, and rate forecast for next week

Today’s mortgage and refinance rates

Average mortgage rates increased only modestly yesterday. And that was a surprise given that day’s excellent jobs report, which might have pushed them much higher. Still, there may be more pain to come next week.

Chances are, yesterday’s jobs report has set the tone for these rates for the next 10 days. So, I reckon mortgage rates are more likely to rise than fall over the coming seven days.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Unfortunately, I can see little hope for sustained falls in mortgage rates in the short term. Yes, they may tumble later in the year.

But, for now, 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
• 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

Mortgage rates are moving within a weird environment at the moment. There are loads of signs across the economy that a recession is on its way.

And yet the two most important indicators — inflation and employment — remain amazingly robust. The latest reports on both those show price increases not slowing further and the number of jobs being created each month actually increasing.

All this means that the bond market that largely determines mortgage rates is being pulled in two directions. It wants to trade in anticipation of the looming recession. But it can’t while those two key indicators remain strong.

The Fed

Why are inflation and employment so important? Because they’re the ones the Federal Reserve focuses on when deciding whether to hike general interest rates.

The Fed is due to make its next rate announcement on Jun. 14. And I reckon it’s a coin toss whether it hikes them by 25 basis points (0.25%) or leaves them where they are.

But investors reckon that a no-change announcement is much more likely than I do. Overnight, the CME FedWatch tool put the chances of that at 74.7%.

But there’s a big caveat that currently goes with the tool’s readings. Two weeks ago, it put the chances of a no-change announcement at 82.6%. One week ago, that had slid off a cliff to 35.8%.

So, it’s currently exceptionally volatile. And that reflects the uncertainty that surrounds the Fed’s next move.

But there’s another factor that heightens that uncertainty. Arguably the most important inflation report, the consumer price index (CPI), is due out the day before (Jun. 13) the next Fed announcement. And it could profoundly affect the central bank’s decision.

The Fed doesn’t directly determine mortgage rates. But it strongly influences them.

Economic reports next week

Next week should be fairly quiet for economic reports. There are fewer than normal.

And the ones that do appear rarely affect mortgage rates much. However, because markets are so sensitive at the moment, it’s possible that Monday’s purchasing managers’ indexes (PMIs) for the services sector could create ripples. There are two of those: one from S&P and the other from the Institute for Supply Management (ISM).

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 — May PMIs for the services sector from S&P and the ISM. Plus April factory orders
• Wednesday — April trade deficit and consumer credit
• Thursday — Initial jobless claims for the week ending Jun. 3. Plus April wholesale inventories

That sounds like a snooze fest. There aren’t even any Fed speakers to liven things up. I don’t know about you but I could use a quiet week.

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

Mortgage interest rates forecast for next week

I was wrong in my prediction for mortgage rates last week. That’s a reminder of how difficult it is to forecast over seven days. It’s much easier to see what’s coming over seven hours, seven weeks or even seven months.

So, take these weekly predictions with a pinch of salt. But, for what it’s worth, I reckon mortgage rates are more likely to rise than fall next week.

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.