Today's mortgage rates

Ahead of next week's Fed meeting, mortgage rates firmed up again.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage took back last week's small decline, increasing by six basis points (0.06%) to 7.18%. The average rate for the most popular mortgage has been above 7% for the last five weeks.

Conversely, the average offered rate for a conforming 15-year FRM managed to post a small decline, easing by a lone basis point (0.01%) to land at 6.51% in the latest survey week. Shorter-term mortgages are most popular with homeowners refinancing existing loans, but with rates as high as they are, there's very little of that going on at the moment.

Freddie's legacy PMMS survey provides data for 5/1 Hybrid ARMs. More erratic than not of late, the initial fixed rate for a hybrid 5/1 ARM rose by nine basis points (0.09%) for a second consecutive week, stopping at 7.01%

By contrast, information culled from the Mortgage Bankers Association's weekly applications survey showed the average rate for a 5/1 ARM to be 6.59%, up twenty-six basis points from the prior week. Regardless of the source, it's clear that the most popular ARM offers only some relief at best from high fixed mortgage rates.

The Fed meets next week to decide if short-term interest rates need to be lifted again to help temper inflation pressures. There is little expectation that they will increase the federal funds and other policy rates, but will likely leave the door open for another hike later this year, if warranted.

Investors will likely more closely be parsing the updated Summary of Economic Projections, where each Fed member provides their outlook for economic growth, inflation and unemployment over a range of time frames. The last update in June pegged the peak rate for federal funds at a median 5.6% this year but also expected a full percentage point in interest rate reductions by the end of next year. If progress on inflation is running as members generally expect, this timeframe should remain the same, but if not, the potential for rate reductions may be moved further into the future. This would have implications for long-term interest rates, including those for mortgages.

Of course, that's more of a tomorrow problem than today. At the moment, interest rates remain firm at fairly high levels, and show little sign of meaningful retreat. As such, mortgage rates probably remain around present levels into next week, with the Fed's words and actions the driving force. Here's hoping they are mostly satisfied with progress to date.

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.