Mortgage rates today, Aug. 10, and rate forecast for next week

Today’s mortgage rates

Average mortgage rates fell moderately yesterday. But they’re still higher than they were this time last week. Still, they are lower than they were on Aug. 1 and much lower than they were at their July high.

We’re due an exceptionally important inflation report next Wednesday. And mortgage rates over the next seven days will likely hinge on that. Given that nobody knows what that report will say, there's no point in my guessing the direction mortgage rates are about to take.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

This time last week, I changed my personal rate lock recommendations. Since then, things have gone badly for mortgage rates. Just my luck.

But I still believe my call was correct. All the forces that typically presage falling mortgage rates remain in place: moderating inflation close to 2% p.a.; a slowing economy; rising unemployment; and high expectations of an imminent cut to general interest rates by the Federal Reserve.

So, as I said, 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

Of course, I’m not suggesting you lock on a day when mortgage rates are falling, regardless of those recommendations.

Moreover, 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.

Why not float when you’re within 15 days of closing? Well, there’s always a chance (especially right now) of a sudden, unexpected rise. And it could take 15 days for them to come back down. Of course, if you’re comfortable with that risk, float away.

What’s moving current mortgage rates

What’s going on?

Last Friday’s jobs report triggered one of the biggest one-day falls in mortgage rates in years. Then the momentum continued this Monday, though less sharply. And I began speculating about mortgage rates falling further and faster than anyone had been expecting.

Me and my big mouth. The very next day, Tuesday, mortgage rates climbed significantly, and they continued to head higher on Wednesday and Thursday. Only yesterday did they fall again.

So, why did this happen? Because markets panicked and overreacted to the bad (but not all that bad) economic news. And then panicked and overreacted again to their initial panic and overreaction.

If you believe that markets are perfect, rational, well-oiled, finely tuned machines, you may doubt my explanation. But, in his New York Times e-newsletter this week, economist and Nobel laureate Paul Krugman recalled a story about the memorable Black Monday 1987 rout in markets.

Midway through Black Monday, economist Robert J. Shiller sent a questionnaire to traders to find out why they were selling. The overwhelming response was because prices were falling.

No expert analyses. No expensive computer models. The big players on Wall Street were selling because everyone else was. In other words, it was a market panic.

The Wall Street Journal (paywall) underlined that yesterday. Jason Zweig wrote: “Stop trying to make it make sense. Just about every volatility storm in the markets quickly morphs into a baloney blizzard, as Wall Street’s market strategists and a swarm of online pundits pretend to explain what just happened and concoct predictions of what will happen next.”

They’re selling or buying because everyone else is selling or buying. It’s not great but it’s all we’ve got.

Next week

Some of this week’s market volatility may have been a result of a lack of economic data. Investors are used to responding to those, and they can provide an anchor for their mood and outlook.

That scarcity shouldn’t be a problem next week. Next Wednesday brings the economic report that often is most consequential of all to mortgage rates. That’s the consumer price index (CPI).

Next week’s is for July and markets are expecting those prices to move a bit higher that month, but to be unchanged or lower year-over-year (Aug. 1, 2023-Jul. 31, 2024). “Core” inflation excludes food and energy prices, which tend to be volatile and can hide the underlying trend. Here are the numbers:

• July CPI — 0.2%, up from June’s -0.1%
• YOY CPI — 3.0%, unchanged from June
• July core CPI — 0.2% up from June’s 0.1%
• YOY core CPI — 3.2%, down from June’s 3.3%

Volatility tends to be driven by the gap between the actual numbers in a report and market expectations.

The specialist economists (analysts) who set market expectations have been pretty good at forecasting inflation figures recently. So, we might see little movement in mortgage rates if they’re right again. But, if they’re badly wrong, we might get more fireworks.

Also next week, we’ll get some other reports that can move mortgage rates. In particular, July figures for retail sales (Thursday) and the producer price index (Tuesday) could cause a stir. And it’s possible that July industrial production (Thursday) and August’s preliminary consumer sentiment (Friday) could have an effect.

Summary of economic reports and events next week

See above for details about the more important economic reports next week. Any abbreviations below are also explained there.

In the following list of next week’s reports, only those in bold typically have the potential to affect mortgage rates appreciably. The others probably won’t have much impact unless they contain shockingly good or bad data.

• Monday — July federal budget
• Tuesday — July producer price index (PPI). Plus July small business optimism index
• Wednesday — July consumer price index (CPI)
• Thursday — July retail sales, industrial production, and import price index (IPI). Plus June business inventories. And initial jobless claims for the week ending Aug. 10
• Friday — Preliminary consumer sentiment in August. Also, housing starts, building permits, and the home builder confidence index, all for July.

I was so wrong about this week being quiet. And I doubt this week will be, either.

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

Mortgage rates forecast for next week

I can't predict how mortgage rates will move next week. That will probably pivot on Wednesday’s CPI, and other reports might influence them, too.

Don’t take these weekly predictions too seriously. It’s much easier to make daily and long-term ones.

How your mortgage interest rate is determined

A bond market generally determines mortgage and refinance rates. It’s the one where trading in mortgage-backed securities takes place.

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 something called you “PITI.” That stands for:

• Principal — Pays down the amount you borrowed
• Interest — The price of borrowing
• Taxes — Specifically property taxes
• Insurance — Specifically 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.