June mortgage rates forecast
With mortgage rates so low, June is a good time to refinance. There’s no need to rush, though: interest rates might remain near record lows for months.
The 30-year fixed-rate mortgage averaged 3.365% APR in May in NerdWallet’s daily rate survey.
This was the second-lowest average for the 30-year fixed in the history of NerdWallet’s survey, just behind April’s average of 3.363% APR.
Mortgage rates were remarkably stable all month, with the average 30-year fixed varying less than one-quarter of a percentage point from its lowest to its highest rate.
Refinancing activity is quiet
In June, mortgage rates are likely to remain stable and low for the third month in a row. The Federal Reserve continues to buy billions of dollars’ worth of mortgage-backed securities every week “to support smooth market functioning.” Fed Chairman Jerome Powell said in April that he expects the central bank to keep intervening in the market for “the next year or so.”
After a surge of mortgage refinance applications in February and March, refinancing activity has leveled off, according to the Mortgage Bankers Association. But compared to a year ago, refinancing applications have more than doubled.
Is refinancing activity too quiet? There remain millions of homeowners who could save money by refinancing, as long as they still have income and credit scores that allow them to qualify. With the skyrocketing unemployment rate, however, many would-be refinancers are stuck with their current mortgages.
One factor might depress refinances in the coming months: the recent surge in coronavirus-related mortgage forbearances. In May, a federal regulator announced a new policy that applies to homeowners who missed making full payments under a forbearance plan. Under this plan, homeowners won’t be able to get a new mortgage until the forbearance ends and they have made three on-time payments.
While the rule introduces a delay of at least three months for many potential refinancers who took forbearances, it’s an improvement over the previous rule, which required a 12-month wait.
Buyers are returning
Home sales plunged in April, the first full month that stay-at-home orders were in effect in many states. But judging by the pace of mortgage applications in late May, home sales are making a return. For the week ending May 22, purchase mortgage applications were up 9% compared to the same week a year earlier, according to the MBA.
After a severe dip in the second quarter of this year, the National Association of Realtors expects home sales to bounce back in the second half of the year. There will be plenty of pent-up demand from people who delayed purchases in winter and spring, and they will be encouraged by likely continued low mortgage rates.
What are the current mortgage rates today?
On Friday, May 29, 2020, the average rate on a 30-year fixed-rate mortgage rose eight basis points to 3.397%, the average rate on a 15-year fixed-rate mortgage went up 14 basis points to 2.869% and the average rate on a 5/1 ARM rose one basis point to 2.992%, according to a NerdWallet survey of mortgage rates published daily by national lenders. A basis point is one one-hundredth of one percent. Rates are expressed as annual percentage rate, or APR. The 30-year fixed-rate mortgage is 10 basis points higher than one week ago and 83 basis points lower than one year ago.
Mortgage rates this week
Mortgage rates held steady near record lows for the week May 29.
The 30-year fixed-rate mortgage averaged 3.343% APR, four basis points lower than the previous week. It was the lowest weekly average since the week ending May 1 (3.319%).
The 15-year fixed, often used for refinancing, averaged 2.764% APR, 10 basis points lower than the previous week.
The 5/1 ARM averaged 2.998% APR, 12 basis points lower than the previous week.
The week was light on news with the potential to move mortgage rates. The most important economic report of the week was about new home sales in April. In that report, the Census Bureau reported that newly built homes were sold in April at an annual rate of 623,000. That was down 6% from the sales pace of the previous April, but still stronger than expected.
This week the Federal Reserve issued its periodic Beige Book report of economic activity across the regions of the United States. The Fed reported that “demand for consumer loans was down significantly outside of heightened activity in home mortgage refinancing.”
With mortgage rates remaining stable, many homeowners still have the ability to save money by refinancing.