Mortgage Interest Rates Forecast

Mortgage rates today: Friday, June 2, 2023

On Friday, June 2, 2023, the average interest rate on a 30-year fixed-rate mortgage dropped 15 basis points to 6.724% APR. The average rate on a 15-year fixed-rate mortgage fell 14 basis points to 5.9% APR, and the average rate on a 5-year adjustable-rate mortgage went up two basis points to 7.431% APR, according to rates provided to NerdWallet by Zillow. The 30-year fixed-rate mortgage is 22 basis points lower than one week ago and 149 basis points higher than one year ago. A basis point is one one-hundredth of one percent. Rates are expressed as an annual percentage rate, or APR.

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Mortgage rates this week

Fixed mortgage rates rose in the week ending June 1, though that overall trend obscures day-to-day volatility.

• The 30-year fixed-rate mortgage averaged 7.02% APR, up 20 basis points from the previous week's average.

• The 15-year fixed-rate mortgage averaged 6.15% APR, up 17 basis points from the previous week's average.

• The five-year adjustable-rate mortgage averaged 7.46% APR, about the same as the previous week's average.

In the final week of the debt ceiling negotiations, mortgage rates saw major swings. Why, you might ask, does the threat of a government default have this particular effect on mortgage interest rates?

Because mortgage rates are strongly tied to bond markets. Mortgages get packaged into mortgage-backed securities. In contrast to the era before the last housing crash and Great Recession, MBS are now well regulated, making them a fairly safe investment. In that way, they're comparable to U.S. government bonds, which are usually considered to be among the safest investments. Mortgage interest rates generally trend alongside bond rates because the market for MBS isn't too different from bond markets — investors looking for as close to a sure thing as they can get.

The specter of the U.S. government potentially failing to make payments on bonds meant that, suddenly, bonds seemed not so safe. That uncertainty briefly drove rates on 30-year fixed-rate mortgages back above 7%.

Following the Memorial Day holiday, as it appeared that debt ceiling negotiations would avert economic disaster, the markets rallied and mortgage rates began to settle down again. But don't expect mortgage rates to get comfy. The Federal Reserve meets in June, and its next move is far from certain. Some Fed officials are signaling a willingness to pause the campaign of rate increases, while others are standing firm on hiking until inflation truly slows. That announcement isn't until June 14, so there's still plenty of time for the unexpected to send mortgage rates up — or down.

» MORE: Why mortgage rates could rise in June