Today’s mortgage and refinance rates
Average mortgage rates held steady yesterday. Of course, these rates remain extraordinarily low by historical standards. But a rising trend in 2021 means they’re now at their highest since July 2020, according to Freddie Mac. And Mortgage News Daily reckons they’re “near one–year highs.”
Sadly, we seem to be stuck in a gently rising trend. So mortgage rates might again rise modestly next week.Find and lock a low rate (Dec 5th, 2021)
Current mortgage and refinance rates
|Conventional 30 year fixed|
|Conventional 30 year fixed||3.291%||3.31%||Unchanged|
|Conventional 15 year fixed|
|Conventional 15 year fixed||2.528%||2.557%||Unchanged|
|Conventional 20 year fixed|
|Conventional 20 year fixed||3.126%||3.158%||Unchanged|
|Conventional 10 year fixed|
|Conventional 10 year fixed||2.618%||2.68%||Unchanged|
|30 year fixed FHA|
|30 year fixed FHA||3.307%||4.071%||Unchanged|
|15 year fixed FHA|
|15 year fixed FHA||2.585%||3.229%||Unchanged|
|5/1 ARM FHA|
|5/1 ARM FHA||2.177%||3.085%||Unchanged|
|30 year fixed VA|
|30 year fixed VA||3.202%||3.397%||Unchanged|
|15 year fixed VA|
|15 year fixed VA||3.001%||3.345%||Unchanged|
|5/1 ARM VA|
|5/1 ARM VA||2.559%||2.441%||Unchanged|
|Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions here.|
COVID-19 mortgage updates: Mortgage lenders are changing rates and rules due to COVID–19. To see the latest on how coronavirus could impact your home loan, click here.
Should you lock a mortgage rate today?
The forces that have been pushing mortgage rates up this year are still potent. And there’s little sign on the horizon of anything that might counteract them.
So my recommendations remain:
- LOCK if closing in 7 days
- LOCK if closing in 15 days
- LOCK if closing in 30 days
- LOCK if closing in 45 days
- LOCK if closing in 60 days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine – or better. So be guided by your gut and your personal tolerance for risk.
What’s moving current mortgage rates
The main reason mortgage rates have been rising is that the economic recovery looks to be gaining momentum. Many consumers have already received their payments under the president’s $1.9–trillion American Rescue Plan Act. And more will soon be flowing into the economy as public bodies begin spending their shares.
Meanwhile, the vaccine rollout continues to gain pace. As of March 18, “75 million have received at least one dose – equal to 30 percent of the population aged 18 or above – while 41 million are considered fully vaccinated,” according to Newsweek. That provides yet more hope for the economic recovery.
Of course, nothing’s certain. And, if that recovery stumbles, mortgage rates could fall again. But choosing when to lock is an odds–based game. And the chances look good for better times – and higher mortgage rates – ahead. At his news conference last week, Federal Reserve Chair Jerome Powell forecast growth in 2021 of 6.5%, the highest level since Ronald Reagan was in the White House.
Inflation fears reemerge
But not everyone was happy with that news conference. And some investors fear that such high growth will mean that the economy will be running too hot, something that can create inflation.
Those with long–term, fixed–interest assets (such as mortgage–backed securities) hate inflation. So they’re selling bonds, which inevitably (though counterintuitive) pushes up yields and rates.
So mortgage borrowers are being hit by a double whammy. Higher rates as a result both of the developing recovery and fears of inflation.
Economic reports next week
Watch out for next Friday. Because markets might react to that day’s personal income, consumer spending and core inflation reports, along with the consumer sentiment index.
Investors and analysts are less likely to care much about the other reports next week. Unless, that is, those reports differ wildly from expectations. Even minor publications can move markets if they contain unexpected news.
Here are next week’s main economic reports:
- Monday – February existing home sales
- Tuesday – February new home sales
- Wednesday – February durable goods orders. Plus March purchasing manager indexes for the services and manufacturing sectors from Markit
- Thursday – Weekly new claims for unemployment insurance
- Friday – February personal income, consumer spending and core inflation reports. Plus March consumer sentiment index
Typically, markets react to unexpectedly good news with higher mortgage rates. You usually see lower rates if figures are bad. But it takes a lot to move them far.
Mortgage interest rates forecast for next week
Unfortunately, I can see no reason to think that next week will be different from recent weeks. And I'm expecting continuing but modest rises in mortgage rates.
Mortgage and refinance rates usually move in tandem. But note that refinance rates are currently a little higher than those for purchase mortgages. That gap’s likely to remain constant as they change.
Meanwhile, a recent regulatory change has made most mortgages for investment properties and vacation homes more expensive.
How your mortgage interest rate is determined
Mortgage and refinance rates are generally determined by prices in a secondary market (similar to the stock or bond markets) where mortgage–backed securities are traded.
And that’s highly dependent on the economy. So mortgage rates tend to be high when things are going well and low when the economy’s in trouble.
But you play a big part in determining your own mortgage rate in five ways. You can affect it significantly by:
- Shopping around for your best mortgage rate – They vary widely from lender to lender
- Boosting your credit score – Even a small bump can make a big difference to your rate and payments
- Saving the biggest down payment you can – Lenders like you to have real skin in this game
- Keeping your other borrowing modest – The lower your other monthly commitments, the bigger the mortgage you can afford
- Choosing your mortgage carefully – Are you better off with a conventional, FHA, VA, USDA, jumbo or another loan?
Time spent getting these ducks in a row can see you winning lower rates.
Remember, it’s not just a mortgage rate
Be sure to count all your forthcoming homeownership costs when you’re working out how big a mortgage you can afford. So focus on your “PITI” That’s your Principal (pays down the amount you borrowed), Interest (the price of borrowing), (property) Taxes, and (homeowners) Insurance. Our mortgage calculator can help with these.
Depending on your type of mortgage and the size of your down payment, you may have to pay mortgage insurance, too. And that can easily run into three figures every month.
But there are other potential costs. So you’ll have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repairs and maintenance costs. There’s no landlord to call when things go wrong!
Finally, you’ll find it hard to forget closing costs. You can see those reflected in the annual percentage rate (APR) you’ll be quoted. Because that effectively spreads them out over your loan’s term, making that higher than your straight mortgage rate.
But you may be able to get help with those closing costs and your down payment, especially if you’re a first–time buyer. Read:
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.