Today's Mortgage Rates - 06/06/2023

Mortgage rates continued their late-spring rise this week, powered higher by solid economic data and more.

As reported by Freddie Mac, the average offered interest rate for a conforming 30-year fixed-rate mortgage increased by another twenty-two basis points (0.22%), lifting the average rate on the most popular mortgage to 6.79%, the highest such rate since last November, although just over an early March level.

Conforming fifteen-year FRMs also strode higher. with the average offered rate for the most common short-term mortgage rising by twenty-one basis points to 6.18%.

Amid growing concerns by investors that strong economic data might see the Fed reconsider pausing interest rate hikes this month, Freddie Mac's legacy rate survey showed the average initial fixed rate for a hybrid 5-year ARM jumping upward by another thirteen one-hundredths of a percentage point, (0.13%) to land at 6.41% for the week. This is the highest weekly rate ever for the most common alternative to a 30-year FRM since Freddie began tracking them in January 2005.

The deal to raise the debt ceiling is coming down to the wire, but is likely to be signed into law, since neither political party wants to be blamed for a first-ever U.S. default on its obligations. Still, markets remain a bit on edge since time is running tight.

Information Pressuring rates higher this week so far included a range new data pointing to a resilient economy, stubborn inflation and a labor market that just keeps powering ahead despite months of monetary policy headwinds. In the latest observations, consumer spending picked up after a couple of lackluster months, and the Fed's favorite measure of inflation showed an uptick in price pressures. Unemployment claims remain very low, and job openings have expanded again, pointing to a still-strong labor market. Among other signals, the overall tenor of the recent economic data suggests that any decision to pause by the Fed at its next meeting will likely be a close call.

Upward pressure remains on interest rates at the moment, but there will likely be a bit of a "relief rally" once a debt deal is in place. Given the economic fundamentals, it will probably be a mild one at best, and we'll probably need to see what the Fed does -- and says about its future intentions -- when the next meeting comes to a close. As such, mortgage rates are likely to be slow to ease, but may settle back a little in the coming days.

Each week in HSH's MarketTrends newsletter, we track and discuss economic conditions that affect mortgage rates and their impact on housing markets and consumers. Read the most recent edition of MarketTrends or subscribe for email delivery.