Mortgage and refinance rates today, Jan. 18, 2023

Today’s mortgage and refinance rates

Average mortgage rates rose moderately yesterday. That’s the second consecutive business day when they increased. But they’re still much lower than they were at the start of the month.

And it’s looking as if they may go lower yet. Because mortgage rates today look likely to fall, perhaps appreciably. Of course, that could change later in the day, but the momentum this morning looked strong.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Don't lock on a day when mortgage rates look set to fall. My recommendations (below) are intended to give longer-term suggestions about the overall direction of those rates. So, they don’t change daily to reflect fleeting sentiments in volatile markets.

I’m still reviewing my personal rate lock recommendations. In particular, I’m trying to get a feel for how the Federal Reserve’s thinking on future rate hikes has evolved in light of good news this month on inflation.

So, for now, those 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

>Related: 7 Tips to get the best refinance rate

Market data affecting today’s mortgage rates

Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:

• The yield on 10-year Treasury notes tumbled to 3.39% from 3.53%. (Very good for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
• Major stock indexes were modestly higher soon after opening. (Sometimes bad for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
• Oil prices increased to $81.83 from $80.98 a barrel. (Bad for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
• Gold prices edged up to $1,925 from $1,916 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold rises and worse when gold falls. Gold tends to rise when investors worry about the economy.
• CNN Business Fear & Greed index — inched lower to 66 from 67 out of 100. (Good for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are often better than higher ones

*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.

Caveats about markets and rates

Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.

So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to fall. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.

Important notes on today’s mortgage rates

Here are some things you need to know:

1. Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
2. Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
3. Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
4. When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
5. Refinance rates are typically close to those for purchases.

A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.

Are mortgage and refinance rates rising or falling?

A sword of Damocles hangs over mortgage rates by a single thread. And it’s all about a chasm that exists in opinions over where interest rates generally are heading. Investors expect rate hikes to slow soon and then to pause before heading lower, possibly all within this year. The Federal Reserve expects hikes to slow less quickly and then for a long pause at their near-term peak.

If the Fed prevails, mortgage rates could rise, perhaps significantly. If investors turn out to be correct, those rates may have further to fall.

Today

Sometimes, retail sales figures are highly important. But they’re less so at the moment, at least compared to inflation and employment data. However, those December ones published this morning still have the potential to move mortgage rates.

The other potentially important report this morning concerned December’s producer price index (PPI). That’s a forward-looking indicator of inflation because it measures prices at factory gates. Its measurements occur early in the supply chain and it could take weeks or months for changes to be reflected in consumer prices.

In the event, both this morning’s most important reports were favorable for mortgage rates. And it’s no surprise those rates were falling soon after publication.

Those two reports are the ones that were most likely to affect mortgage rates this week. But two other economic events are already looming.

First, is the publication next Friday of another inflation report, the personal consumption expenditures (PCE) price index. And that’s the Fed’s preferred measure of inflation.

And, secondly, comes the Fed’s announcement of its next rate hike on Feb. 1. A hike is pretty much inevitable. But will it be 25 basis points (0.25%) or 50 basis points (0.5%)? The former could see mortgage rates fall while the latter may see them rise.

Debt ceiling

Oh, and don’t forget the debt ceiling, which is due to kick in tomorrow but which could reach a crisis point early this summer. Markets could begin to react to the threat well before that point is reached, if it is.

I covered the ceiling yesterday. But a group in the U.S. House of Representatives has already indicated that it will sabotage raising the limit, absent some significant spending cuts. And, yesterday, The New York Times (paywall) reported:

“Bank of America analysts wrote in a note to clients this week that a default in late summer or early fall is ‘likely,’ while Goldman Sachs called the possibility that the government would not be able to make good on its bills a ‘greater risk’ than at any time since 2011. When the nation approached the brink in that episode, its credit rating was downgraded and wild market gyrations helped to force lawmakers to blink.”

If that sounds bad, it’s because it really, really is.

For more background on mortgage rates, please read the latest weekend edition of this daily rates report.

Recent trends

According to Freddie Mac’s archives, the weekly all-time low for mortgage rates was set on Jan. 7, 2021, when it stood at 2.65% for conventional, 30-year, fixed-rate mortgages.

Freddie’s Jan. 12 report put that same weekly average at 6.33%, down from the previous week’s 6.48%.

In November, Freddie stopped including discount points in its forecasts. It has also delayed until later in the day the time at which it publishes its Thursday reports. And, from now on, we'll be updating this section on Fridays.

Expert mortgage rate forecasts

Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.

And here are their rate forecasts for the current quarter (Q4/22) and the first three quarters of next year (Q1/23, Q2/23 and Q3/24).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s and the MBA’s forecasts appeared on Dec. 19 and Freddie’s on Oct. 21. Freddie now publishes its forecasts quarterly and its figures can quickly become stale.

Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.

Find your lowest rate today

You should comparison shop widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:

“Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan.”

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 end result is a good snapshot of daily rates and how they change over time.