So much for Wall Street predictions.
According to Freddie Mac's weekly mortgage rate survey, 30-year mortgage rates are holding low, closing last month at 3.42%, on average, nationwide.
30-year mortgage rates are down more than 50 basis points (0.50%) since the start of the year. 15-year mortgage rates are down by a similar amount.
Analysts and mortgage shoppers alike called for higher rates in 2016. The opposite happened.
If you purchased a home within the last year, or if your mortgage is more than a few years old, you could possibly benefit from a refinance.
More than 8.7 million U.S. homeowners are missing the chance to refinance. And, if you're buying a home, there have been few better times to be looking.
Because of how mortgage rates have dropped, if you could afford a $400,000 home in January, today, you can afford a home for $422,000 -- an increase of 5.5% to your purchasing power.
It's a good time to take a look at today's low rates.Click to see today's rates (Oct 24th, 2016)
The average conventional 30-year fixed rate mortgage ended September at 3.42%, according to Freddie Mac's Primary Mortgage Market Survey (PMMS).
The Freddie Mac rate is available to "prime" borrowers paying an accompanying 0.5 discount points at closing.
A "prime" borrower is one with excellent credit, a large downpayment, and adequate income, and one who is applying for a mortgage amount within conventional loan limits.
That's why average rates are terrific for market trend analysis, but not very useful to consumers looking for their rate. There are a number of reasons for this.
First, Freddie Mac compiles quotes from more than 100 lenders. Some quotes are lower, some higher; but each response is blended with all the others.
As a consumer, you make a final choice on only one rate. But that is actually advantageous. You can "poll" multiple lenders -- by requesting written quotes from three or four -- and choose the best offer. You're not stuck with an average.
Second, you may not want to pay the 0.5% in points. You may choose to pay more to receive an even lower rate, or pay not points at all, or even request a no-closing-cost mortgage.
Third, you might not fit the profile of the "prime" borrower. You have little to no downpayment saved, or have a recovering credit score. But these less-than-prime factors may work to your advantage, too.
Namely, you may be eligible for a government-sponsored loan program.
Freddie Mac's interest rate survey applies to conforming loans and conventional mortgage rates only. Government-backed FHA mortgage rates and VA mortgage rates are not surveyed as part of the report; nor are mortgage rates for USDA loans.
Rates for these other loan types are even lower.
All of this makes it easier for today's refinancing homeowners to qualify for streamlined loans such as the FHA Streamline Refinance, the VA Streamline Refinance, and the USDA Streamline Refinance.
Streamlined refinance loans can close in as few as 30 days because of reduced paperwork requirements and appraisal waivers. Streamlined refinances are simpler for banks to underwrite and approve.Click to see today's rates (Oct 24th, 2016)
Today's mortgage rates are well-entrenched in the 3s -- and some borrowers report getting rates in the twos. Yes, really.
Loans now cost just $445 monthly for every $100,000 borrowed, excluding escrows for taxes and insurance; and, private mortgage insurance (PMI), where applicable.
Editor's Note: PMI is neither good nor bad.
It should be noted, though, that, although mortgage rates are low today, they may not stay low for long. Mortgage rates change quickly with the economy, and with shifts in market sentiment.
Mortgage-backed securities (MBS) -- the Wall Street asset upon which mortgage rates are "made" -- have been erratic of late, which has rates on shaky ground.
MBS pricing is currently responding to influences on the economy, including the Federal Reserve's monetary policy, the jobs market, and developments in nations abroad (e.g.; Great Britain).
Mortgage rates have been at or below 3.5% for 14 straight weeks, which is just the second time that's happened in history. In October, though, mortgage rates could trend higher; or, shoppers may find rates retreating even lower.
Your luck with the month's mortgage rates will be part economy, part psychology, and part good fortune.
Here are reports on the most relevant stories to watch.
Last month, the Non-Farm Payrolls report showed 151,000 net new jobs added to the economy. This was less than economists expected.
In October, analysts expect around 170,000 jobs to be added. This is an important number to know.
If the actual job creation is much higher, mortgage rates could rise. Jobs are what drive an economy. Healthy economic outlook could spur the Federal Reserve to raise its benchmark rate the next time it meets, causing a ripple effect through interest rate markets, including those of mortgage rates.
In September, the Fed voted to hold rates steady. But three-in-ten voting members wanted to hike rates.
The next meeting convenes in November. The pendulum seems to be swinging toward an upward rate adjustment, and robust job creation could sway more Fed members to the "hike" camp by the end of 2016.
More than 14 million jobs have been added in the economy since 2010 and the unemployment rate has dropped below 5.0 percent. But not every aspect of recent job reports has been rosy. Wage growth appears to have stalled.
This is important.
Stagnating wages tend to stagnate consumer spending, which can stave off inflation. Inflation works against low mortgage rates.
Lack of inflation, therefore, can work in favor of lower mortgage rates.
This is why the upcoming release of the Non-Farm Payrolls report has relevance to today's mortgage rate shopper -- the report may give convincing reason for mortgage rates to jump in the coming weeks.
Inflation rates are another influence on today's consumer rates. As inflation rates rise, the Fed is more inclined to raise the Fed Funds Rate, which can cause mortgage rates to move.
Inflation is the enemy of low mortgage rates.
Inflation works against low rates because inflation is the literal devaluing of the U.S. dollar. This, in turn, devalues everything denominated in U.S. dollars -- including mortgage-backed bonds.
When inflation pressures grow, mortgage rates often rise.
Since 2012, inflation rates have been stable but beneath the Federal Reserve's target rate of two percent -- sometimes, stubbornly. When inflation rates run too low for too long, disinflation can occur.
Disinflation, which is more commonly called "deflation", is linked to falling mortgage rates.
Beginning in 2009, the Fed began to take steps to stimulate the economy and avoid disinflation but, to date, those efforts have yet to have their desired effect.
And now, with oil prices low and the dollar keeping value worldwide, some fear that Cost of Living indices will begin to show price drops instead of increases.
Recent data puts the annual inflation rate at just 1.7 percent annually.
The Fed acknowledges low inflation rates as a near-term issue, but believes that inflation rates will return to a more stable range in the medium-term.
It's unclear how long of a period of time "medium term" is.
Expect a push-pull on inflation/disinflation forces throughout the coming weeks. Rising rates of inflation will typically cause mortgage rates to rise. Receding rates of inflation will typically lead mortgage rates lower.
If the dollar strengthens, demand for mortgage bonds is expected to increase which could actually offset the effects of an increase in the Fed Funds Rate.
Weakness in non-U.S. economies should also affect this month's mortgage rates.
In general, as global economies weaken, U.S. mortgage rates improve. This is the result of an investing pattern known as a flight-to-quality.
"Flight-to-Quality" describes, during periods of economic or political uncertainty, the flow of money from risky assets toward safe ones. Investors seek safe assets to protect their principal investments, and to shield against loss.
This pattern is also known as safe-haven buying.
U.S. mortgage bonds are among the safest investment classes in the world. So, when war is imminent; or, when economies including the Eurozone face an uncertain future; or, when oil prices threaten tens of thousands of jobs, mortgage rates fall.
Investment in the U.S. dollar has been strong, too, which also helps mortgage interest rates to drop.
This is because mortgage rates are based on the price of mortgage-backed securities (MBS), which are priced in U.S. dollars. As the value of the dollar rises, so does the inherent value of owning MBS. This drives demand for mortgage bonds higher which leads prices up.
When bond prices rise, mortgage rates drop.Click to see today's rates (Oct 24th, 2016)
This week, all eyes will be on Non-farm Payrolls report. Data on job creation and wage growth, as well as the headline unemployment rate, could cause market swings upon Friday's 8:30 AM ET release.
The complete calendar for this week reads:
The markets should be fairly quiet, that is, until Friday.
Remember: Mortgage interest rates change quickly and often without notice. It's a good, safe time to lock a low rate. Today's mortgage rates may not last.
Mortgage rates are currently below 3.5 percent. Home buyers have excellent purchasing power at today's rates; and refinancing households can save more cash with a refinance.
Get today's live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.Click to see today's rates (Oct 24th, 2016)
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
The Mortgage Reports is doing the BEST mortgage reporting of anyone out there!
Jerolyn C. CPA
The Mortgage Reports isn't just basic mortgage rate information -- it's analysis on rate changes and trends, and updates on the laws in lending. Subscribing to the site's daily updates is worthwhile.
Elizabeth C. Librarian
Thanks to The Mortgage Reports, I have a new, very low rate for my home. I owe you so much.
2016 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)