Mortgage rates today, May 18, and rate forecast for next week

Today’s mortgage rates

Average mortgage rates climbed moderately yesterday. But it wasn’t enough to stop the last seven days being a good period for those rates. In other words, mortgage rates are lower this morning than they were a week ago.

Next week’s calendar has few economic reports. And those that appear on it rarely move mortgage rates far or for long. So, I’m hoping mortgage rates next week will move down just a little. Unless, of course, some major, economy-changing news emerges from left field.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

After three consecutive weeks of falling mortgage rates, we’re all in a more cheerful mood. But don’t get too carried away. Those rates are still very high by 21st-century standards. And I’m expecting more periods of rises before the falls become more consistent and reliable.

Nobody can be sure when that downward trend will emerge. But I doubt it will be before Jul. 31, which is when the Federal Reserve might signal a first cut in general interest rates in September.

Naturally, I don’t want you to lock on days when we’re expecting lower mortgage rates. But be ready to do so when the outlook appears more gloomy.

So, 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

Good news for mortgage rates has been piling up. The most recent jobs report and last week’s consumer price index and retail sales data have all triggered falls.

It’s possible that these are early signs of the economy weakening and inflation cooling. But, in isolation, a monthly economic report is notoriously unreliable. And we’ll likely need to see another two, three or more before we can identify a trend.

So, it’s way too early to bank on the good times (for mortgage rates) continuing. But recent reports certainly provide more than a glimmer of hope.

Next week and the Fed

No economic reports are scheduled for next week before Wednesday. But Sunday, Monday and Tuesday each brings a speaking engagement for one or more senior Federal Reserve officials. And there are a couple more across Thursday and Friday.

Wall Street will be keen to hear their views on how recent economic reports might have changed the Fed’s plans for future cuts to general interest rates. The sooner such cuts begin and the more of them are on the 2024 schedule, the better for mortgage rates.

They normally listen most closely to Fed Chair Jerome Powell, whose voice is by far the most powerful among his colleagues. However, his Sunday speech comprises prerecorded commencement remarks. So, there will be no Q&A. And you have to ask how easily he could shoehorn interest rate policy into such an event.

Wednesday brings the minutes of the last (May 1) meeting of the Fed’s rate-setting body. That’s called the Federal Open Market Committee (FOMC).

Normally, I warn that publications of FOMC minutes can affect mortgage rates, sometimes appreciably. However, I’m less worried this time.

The Fed has grown more open about its behind-the-scenes thinking in recent years. We have a pretty good idea of what was said at meetings through news conferences shortly after each FOMC breaks up. And Fed speakers are now much more open about their opinions than they once were.

So, I expect Wednesday’s FOMC minutes will be a damp squib. But I can’t be sure they’ll contain no surprises.

Next week’s economic reports

Next week’s reports will have to contain some pretty shocking data to move mortgage rates far or for long. Typically, even the most important of these causes only a brief and limited response in markets. And most pass by unnoticed.

There are three that sometimes provoke some response. They’re:

• Thursday— A pair of May purchasing managers’ indexes (PMIs) from S&P: one for the services sector and the other for the manufacturing one. These can be helpful indicators of economic activity
• Friday — Consumer confidence index. The U.S. economy is highly reliant on consumer confidence

Markets are expecting two of those to show minor improvements. The third, the manufacturing PMI, is expected to plateau. For lower mortgage rates, we’d like them all to perform worse than expected.

Summary of economic reports and events 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 — Nothing
• Tuesday — Nothing
• Wednesday — FOMC minutes. Plus April existing home sales
• Thursday — May PMIs for the services and manufacturing sectors from S&P. Also, initial jobless claims during the week ending May 18
• Friday — May consumer sentiment. Also, April durable goods orders

Next week might turn out to be quiet. But don’t forget about the numerous speaking engagements for senior Fed officials.

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

Mortgage rates forecast for next week

What happens to mortgage rates over the next seven days may largely depend on how upbeat Fed speakers are about upcoming cuts to general interest rates.

But my best bet is that mortgage rates next week will fall just a little.

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.

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