Today’s mortgage and refinance rates
Average mortgage rates rose yesterday. It was only a small increase. But it was the first since the final days of March.
Does the first rise in nearly three weeks signal an end of these happy days of consistent falls? It might. But one day’s movement is far from enough to make a judgment. So I have to repeat last week’s forecast: mortgage rates next week are unpredictable.Find and lock a low rate (Dec 9th, 2021)
Current mortgage and refinance rates
|Conventional 30 year fixed|
|Conventional 30 year fixed||2.993%||2.998%||Unchanged|
|Conventional 15 year fixed|
|Conventional 15 year fixed||2.25%||2.367%||Unchanged|
|Conventional 20 year fixed|
|Conventional 20 year fixed||2.75%||2.842%||Unchanged|
|Conventional 10 year fixed|
|Conventional 10 year fixed||1.924%||2.098%||+0.02%|
|30 year fixed FHA|
|30 year fixed FHA||2.763%||3.421%||+0.03%|
|15 year fixed FHA|
|15 year fixed FHA||2.53%||3.115%||Unchanged|
|5 year ARM FHA|
|5 year ARM FHA||2.5%||3.201%||Unchanged|
|30 year fixed VA|
|30 year fixed VA||2.375%||2.547%||+0.01%|
|15 year fixed VA|
|15 year fixed VA||2.25%||2.571%||Unchanged|
|5 year ARM VA|
|5 year ARM VA||2.5%||2.379%||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 current lack of certainty makes life difficult for homebuyers. True, in the long term, mortgage rates are highly likely to rise, in my view. But what should you do in the meantime?
I’d suggest two things. First, talk to your lender to make sure you’re able to lock at a moment’s notice. And, secondly, keep a very close eye on mortgage rate movements. Because it’s possible they’ll rise sharply if and when they do change direction. As long as you do those, you might choose to continue to float until rates begin to consistently rise again.
Unfortunately, I’m unable to predict when that change may occur. So my overall 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
During the week, I tried to find possible explanations for why mortgage rates were still falling when most would have expected them to be rising. MarketWatch provided a couple:
- Bond investors had been working on the assumption that the Federal Reserve would raise its rates sooner than advertised. But the Fed then sold them on the idea it would indeed keep those rates low for longer. So markets had to correct themselves
- Worries about the safety of some vaccines and the possibility of vaccine–resistant strains emerging have slightly tarnished optimism over the economic recovery
And, yesterday, Mortgage News Daily came up with a third possible explanation. It thought that quite a few traders had “short positions,” bought on the assumption that rates would keep rising. In other words, they’d laid bets on higher rates.
When rates fell, they had to cover their losses by buying more bonds. And that pushed yields (and mortgage rates) lower. Worse, the more they bought, the lower the yields fell, meaning they had to buy yet more. And that created a snowball effect.
So do you buy some or all of those explanations? I think each might have contributed.
But what they all imply is that April’s falls in mortgage rates have very short–term drivers. And that it’s likely the 2021 upward trend will resume soon. Why? Because so far the economic recovery seems firmly on–track. And, unless that changes, higher mortgage rates are all–but inevitable.
Economic reports next week
This week, bond markets have responded to economic data in the opposite way to normal. So they’ve fallen on good news. Why? Well, maybe the three explanations in the last section were the reason.
Anyway, that means you have to view economic reports next week with some caution. If those three exceptional drivers have played out, things may get back to normal. But, if they’re still active, we may continue to see unexpected reactions to new data.
Luckily, there’s little on the calendar next week. It’s all in the last two days. And there are no really important reports to worry about.
So here are next week’s main economic reports:
- Thursday – Weekly new claims for unemployment insurance. Also March existing home sales and leading economic indicators
- Friday – Markit purchasing managers’ indexes (PMIs) for the services and manufacturing sectors in April. Plus March new home sales.
Typically, markets react to unexpectedly good news with higher mortgage rates. You usually see lower rates if figures are bad. But that’s not necessarily been the case recently. And it takes a lot to move them far.
Mortgage interest rates forecast for next week
For a second week, I have to say that Mortgage rates are essentially unpredictable at the moment. Earlier I provided three possible explanations for April’s falls. But none of them lends itself to short–term forecasting.
Of course, I’m reasonably certain that these rates will begin to rise again soon. Maybe yesterday was the start of the resumption of the 2021 upward trend. But it’s at least as likely not to be. And nobody can be sure about much.
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 fairly 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.