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

Today’s mortgage rates

Average mortgage rates nudged moderately lower yesterday. And the week as a whole was fine, with those rates ending it appreciably lower than they started it. But they’re still higher than any of us would like.

Yet again, mortgage rates next week are unpredictable. They’re likely to pivot on the consumer price index (CPI) data, due Thursday. And I have no idea what horrors or delights (or boringness) that might bring.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Overall, we’ve had little to complain about over mortgage rates in June and so far in July. They’re currently much closer to the low for that period than the high.

Might this mean that those rates have embarked on their much-anticipated, sustainable downward trend? It’s possible. But I doubt it.

I reckon it’s more likely that mortgage rates will continue to drift aimlessly for at least two more months, maybe longer, and only then move lower with greater purpose.

But that opinion is less certain than it was a week or two ago. And it’s possible the kinder trend will set in early in August. We’ll just have to wait and see. More on that below.

In any event, 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

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

The bigger picture

Two things helped nudge mortgage rates lower this week. First up was Federal Reserve Chair Jerome Powell. He told an audience of central bankers that he thought recent data on inflation and employment might help the Fed cut general interest rates sooner than many feared.

And, secondly, yesterday’s official jobs report (aka the employment situation report) showed job creation slowing and the unemployment rate creeping higher.

Mr. Powell will be giving testimony on Capitol Hill on Tuesday and Wednesday next week. And Wall Street will be listening carefully to see if yesterday’s jobs report has made him even more optimistic about early rate cuts.

Few observers currently think the Fed will make such a cut when the next rate announcement is due on Jul. 31. But there’s a real possibility of it signaling that day that a Sep. 18 rate reduction is on the cards. And that alone could be good for mortgage rates.

However, the Fed’s mood at the end of this month will largely depend on the two inflation reports that are due between now and then. We’ll have to wait until Jul. 26 for the central bank’s favorite gauge of inflation. But the markets’ favorite should land next Thursday, Jul. 11.

Next Thursday’s crucial inflation report

For markets, next Thursday’s consumer price index (CPI) is often the most consequential of all economic reports for mortgage rates. It covers June.

For those rates to fall, we probably need to see inflation cooling even more than markets are expecting. Warmer-than-expected numbers could push those rates higher. And data that’s precisely as expected could leave them close to unmoved. (See market expectations, below.)

Like most other inflation reports, the CPI contains four main components. Two of those measure price changes across all the items measured in the survey. And the other two reveal “core” prices, which are the same ones after excluding volatile food and energy prices.

Why two numbers for each of regular and core prices? Because changes are measured over different periods. You get the reporting month’s (June’s) figure and the year-over-year (YOY, from Jul 1, 2023, to Jun 30, 2024) one.

What markets are expecting from the CPI

Market expectations are based on the consensus forecast of analysts, who are specialist economists who study particular aspects of the economy, in this case, inflation. I use MarketWatch for the ones I report, but others are around.

And here’s what markets were expecting overnight today:

• June CPI — 0.1%, up from May’s 0.0%
• YOY CPI — 3.1%, down from May’s 3.3%
• June core CPI — 0.2%, unchanged from May
• YOY core CPI — 3.4%, unchanged from May

The bigger the gap between market expectations and Thursday’s actual data, the more volatile mortgage rates are likely to be. Remember, we’re hoping for lower-than-expected actuals because we want lower mortgage rates.

A second inflation report, due Friday

Leaving aside the CPI, most economic reports next week rarely trouble mortgage rates in a perceptible way. But Friday’s producer price index (PPI) might have some impact.

As its name implies, this is the CPI’s little brother. It’s nothing like as powerful as its big sister. But it can still move mortgage rates sometimes. I’ll brief you about it more fully next Thursday.

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 — May consumer credit
• Tuesday — Fed chair's Senate testimony. Plus June small business optimism index from the National Federation of Independent Business
• Wednesday — Fed chair's House testimony. Plus May wholesale inventories
• Thursday — June CPI. Plus June federal budget. Also, initial jobless claims for the week ending Jul. 6
• Friday — June PPI. Plus the preliminary reading of July’s consumer sentiment

Thursday’s CPI is likely to be most consequential for mortgage rates next week. But watch out, too, for the Fed chair’s testimony

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

Mortgage rates forecast for next week

Yet again, I can’t predict the direction mortgage rates will take next week. They’ll likely pivot on Thursday’s CPI but the Fed chair could have a big effect, too. And they’re currently both unknowable.

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.