Mortgage rates today, Jan. 6, and rate forecast for next week

Today’s mortgage rates

Average mortgage rates inched lower yesterday. That was a surprise because they started the day climbing sharply in response to that morning’s better-than-expected jobs report. Read on for reasons why that might have happened. Unfortunately, they still closed yesterday evening appreciably higher than they were one week earlier.

Mortgage rates could rise or fall next week. Everything depends on whether Thursday’s consumer price index delivers good or bad news. I’m hoping they won’t move far.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Of course, the rises in mortgage rates we’ve seen recently worry me. However, I continue to think that inflation and general interest rates will gradually fall this year. And that’s very likely to cause mortgage rates to do the same.

In other words, I see plenty of grounds to hope that recent rises will turn out to be a blip within a continuing downward trend. Naturally, I could be wrong. But I reckon that’s their most likely course.

So, my personal rate lock recommendations are:

• LOCK if closing in 7 days
• FLOAT 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

Yesterday

What happened yesterday? The jobs report showed surprising resilience in the labor market. And that would normally be bad for mortgage rates. I was expecting them to rise appreciably.

Well, it may be that markets bought a narrative that appeared in yesterday’s Wall Street Journal (paywall). Its story ran under the headline, “The Job Market Can Stay Strong Without Rekindling Inflation.”

Personally, I believe that may well be true. But it’s not a theory that markets and the Federal Reserve have seriously bought before.

Still, if they’re ready to do so now, that could be good for mortgage rates. Because it would mean that economic reports that bring good economic news won’t as often push those rates higher.

Another reason why yesterday’s jobs report might have had a limited effect on mortgage rates is that it wasn’t all as relentlessly positive as the headline figures suggested. The Journal observed: “Friday’s report wasn’t all sweetness and light. The unemployment rate held steady only because of a large drop in labor participation—the share of people working or actively looking for jobs.”

Markets initially greeted the report as I’d expected, by pushing mortgage rates sharply higher. But that closer analysis might have caused second thoughts later in the day. In any event, we saw mortgage rates closing yesterday a tiny bit lower than they had on Thursday evening.

Next week

The first part of next week is a snoozefest for economic reports. There’s only one a day before Thursday, and none of those typically moves mortgage rates more than the tiniest bit.

But everything changes on Thursday when December’s consumer price index (CPI) is published. That’s potentially the most influential of all monthly reports, rivaled only by the jobs report.

Markets are expecting the raw, “all-items” CPI to inch higher. But economists and the Fed tend to focus more on “core CPI,” which strips out volatile food and energy prices, revealing underlying inflationary trends. And that’s expected to inch lower. In any event, the lower the CPI numbers are, the better for mortgage rates.

The same rule applies to Friday’s producer price index (PPI). That’s similar to the CPI but measures price changes earlier in the supply chain, during the manufacturing and wholesale phases. Markets are expecting both the PPI and the core PPI to tick higher.

The PPI has much less influence on mortgage rates than the CPI. But it could still move them.

Economic reports next week

See above for details about the more important economic reports next week.

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 — November consumer credit
• Tuesday — November trade deficit
• Wednesday — November wholesale inventories
• Thursday — December consumer price index. Plus new claims for unemployment benefits for the week ending Jan. 6
• Friday — December producer price index.

Watch out for Thursday!

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

Mortgage rates forecast for next week

Mortgage rates next week could go either way. Which way will almost certainly be determined by Thursday’s CPI report.

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.