Mortgage rates today, Jul. 27, and rate forecast for next week

Today’s mortgage rates

Average mortgage rates fell moderately yesterday. And that was enough for those rates to be slightly lower this morning than they were seven days ago.

Two big events next week could transform the outlook for mortgage rates. But they could push them higher or lower. And I have no way of knowing which. So, once again I'm ducking any prediction of how mortgage rates will move next week.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Overall, I’m pretty optimistic about the outlook for mortgage rates. I reckon the most likely scenario would see them drifting gently lower through into 2025 and possibly beyond.

But there are very many variables in play, many of which could result in higher or stagnant rates.

So, I’m being cautious. And, 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
• FLOAT if closing in 60 days

Of course, I’m not suggesting you lock on a day when mortgage rates are falling. There will likely be plenty of days and longer periods when the outlook for those rates is positive. By all means, take advantage of those.

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.

What’s moving current mortgage rates

What’s going on?

Yesterday’s inflation report was fine for mortgage rates. It came in as forecast. And you could read it as a tiny bit good or bad depending on your perspective and the numbers you chose to focus on.

But the consensus seems to be that it was neither good nor bad enough to change the Federal Reserve’s thinking when its rate-setting body meets next week.

Few expect the Fed to announce a cut to general interest rates next Wednesday. But many hope it will signal that day that a cut is likely (the Fed doesn’t do cast-iron guarantees) at its following meeting on Sep. 18.

Yesterday, The New York Times (paywall) quoted Gennadiy Goldberg, who is head of U.S. rates strategy at TD Securities: “Friday’s report ‘keeps a September cut on track,’ he said. ‘I don’t think that they are going to pre-commit to it at the July meeting, necessarily, but the pace of inflation has continued to slow.’“

That sounds about right to me. And mortgage rates are likely to start to fall consistently (albeit slowly) once markets believe the Fed is set to start cutting general interest rates.

Next week’s key events: 1. The Fed rate announcement

The first key event is due at 2 p.m. Eastern next Wednesday. That’s when the Fed will announce whether it’s cutting the Fed Funds rate (to which most other interest rates are directly or indirectly tied) that day. Thirty minutes later, Fed Chair Jerome Powell will host a news conference to expand on the announcement.

According to the CME FedWatch tool, the smart money is overwhelming saying there won’t be a cut. But the rate-setting body (formally known as the Federal Open Market Committee or FOMC) may well signal that such a cut is on the cards for September. That would likely be very good for mortgage rates.

Next week’s key events: 2. The July jobs report

Next Friday brings the monthly jobs report, formally called the employment situation report. This one covers July.

Jobs reports and consumer price indexes vie for the top spot as to which is the more consequential for mortgage rates. And this one could move those rates significantly and for a sustained period. So, don’t underestimate its potential.

Next Friday, mortgage rates are most likely to fall if we see lower-than-expected figures for nonfarm payrolls (the number of new jobs created that month) and average hourly earnings. But we’d like a higher-than-expected unemployment rate.

Expected by whom? Markets. And here, according to MarketWatch, is what markets are expecting to see that day:

• Nonfarm payrolls — 190,000, down from June’s 206,000
• Unemployment rate — 4.1%, unchanged since June
• Hourly wages — Up 0.3%, again unchanged since June

If market expectations are met, mortgage rates might barely move next Friday. It’s the gap between expectations and actual data that generates volatility.

But be warned. The analysts (specialist economists) who set expectations have a pretty terrible record when it comes to forecasting employment data.

There are various other reports next week that could move mortgage rates a bit and for a day or two. But the Fed and the jobs report are likely to overshadow all those.

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 — Nothing
• Tuesday — June job openings and labor turnover survey (JOLTS), plus July consumer confidence index. Also, the May S&P Case-Shiller home price index
• Wednesday — Fed interest rate announcement. And July ADP private-sector employment report. Plus the second quarter’s employment cost index and June pending home sales
• Thursday — Second quarter productivity. And July purchasing managers' indexes for the manufacturing sector from S&P and the ISM. Plus June construction spending. And initial jobless claims for the week ending Jul. 27
• Friday — July jobs report. And June factory orders

Don’t blink on Wednesday afternoon or Friday morning!

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

Mortgage rates forecast for next week

Once again, next week’s two big economic events make pointless my trying to predict where mortgage rates will move over the next seven days. If I knew what they will bring, I would tell you.

(Well, actually, I wouldn’t. If I were that good at seeing into the future, I’d be enormously rich and would be now sitting on a tropical beach, sipping cocktails.)

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.