Mortgage and refinance rates today, August 5, 2021

Peter Warden
The Mortgage Reports editor

Today’s mortgage and refinance rates 

Average mortgage rates unexpectedly edged higher yesterday. Read on to discover how a speech by a senior Federal Reserve figure managed to turn markets around.

Early movements in markets this morning suggest mortgage rates today might move higher again. But investors have the jitters over tomorrow’s key employment situation report. And that makes markets unpredictable.

Find and lock a low rate (Oct 18th, 2021)

Current mortgage and refinance rates 

Program Mortgage Rate APR* Change
Conventional 30 year fixed
Conventional 30 year fixed 2.688% 2.688% Unchanged
Conventional 15 year fixed
Conventional 15 year fixed 1.99% 1.99% Unchanged
Conventional 20 year fixed
Conventional 20 year fixed 2.375% 2.375% Unchanged
Conventional 10 year fixed
Conventional 10 year fixed 1.851% 1.875% +0.05%
30 year fixed FHA
30 year fixed FHA 2.564% 3.215% Unchanged
15 year fixed FHA
15 year fixed FHA 2.369% 2.968% +0.03%
5/1 ARM FHA 2.5% 3.207% Unchanged
30 year fixed VA
30 year fixed VA 2.25% 2.421% Unchanged
15 year fixed VA
15 year fixed VA 2.114% 2.434% -0.01%
5/1 ARM VA
5/1 ARM VA 2.481% 2.38% 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.
Find and lock a low rate (Oct 18th, 2021)

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?

So, yesterday’s modest rise in mortgage rates means we probably won’t reach or exceed the all-time low this week, though that’s still possible. But those rates are still extraordinarily low. And, if you were to lock today, you could get incredibly close to the best deal in history available to a borrower like you.

Yes, you might lose out if mortgage rates return to their downward path. But, chances are, you’d only lose a little. And you’d eliminate the risk of those rates suddenly heading higher.

Only you can decide what to do next. But my personal rate lock recommendations are:

  • LOCK if closing in 7 days
  • LOCK if closing in 15 days
  • FLOAT if closing in 30 days
  • FLOAT if closing in 45 days
  • FLOAT if closing in 60 days

However, I don’t claim perfect foresight. And your personal analysis could turn out to be as good as mine — or better. So you might choose to be guided by your instincts and your personal tolerance for risk.

Market data affecting today’s mortgage rates 

Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:

  • The yield on 10-year Treasury notes rose to 1.21% from 1.13%. (Bad for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields, though less so recently
  • Major stock indexes were higher shortly after opening. (Bad for mortgage rates.) When investors are buying shares they’re often selling bonds, which pushes prices of those down and increases yields and mortgage rates. The opposite may happen when indexes are lower
  • Oil prices climbed to $68.47 from $68.29 a barrel. (Neutral for mortgage rates*.) Energy prices play a large role in creating inflation and also point to future economic activity. 
  • Gold prices fell to $1,804 from $1,834 an ounce. (Bad for mortgage rates*.) In general, it’s better for rates when gold rises, and worse when gold falls. Gold tends to rise when investors worry about the economy. And worried investors tend to push rates lower
  • CNN Business Fear & Greed indexrose to 31 from 27 out of 100. (Bad for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are better than higher ones

*A change of less than $20 on gold prices or 40 cents on oil ones is a fraction of 1%. So we only count meaningful differences as good or bad for mortgage rates.

Caveats about markets and rates

Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.

So use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, so far mortgage rates today look likely to rise. But be aware that “intraday swings” (when rates change direction during the day) are a common feature right now.

Find and lock a low rate (Oct 18th, 2021)

Important notes on today’s mortgage rates

Here are some things you need to know:

  1. Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care
  2. Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
  3. Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the wider trend over time
  4. When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
  5. Refinance rates are typically close to those for purchases. And a recent regulatory change has narrowed a gap that previously existed

So there’s a lot going on here. And nobody can claim to know with certainty what’s going to happen to mortgage rates in coming hours, days, weeks, or months.

Are mortgage and refinance rates rising or falling?

Today and soon

What happened yesterday? First thing, a small fall looked on the cards. But average mortgage rates ended the day modestly higher.

Well, this morning’s Financial Times puts the change of direction down to a single speech. And it was delivered yesterday by Federal Reserve Vice Chair Richard H. Clarida.

If you read yesterday’s edition of this daily column, you’ll know about the risks posed to low mortgage rates by the Fed. In brief, it’s currently keeping them artificially low by buying $40 billion in mortgage-backed securities (MBSs, a type of bond that directly determines mortgage rates) each month. But it will have to stop doing that some time. And markets inferred from Mr. Clarida’s speech that it might be sooner rather than later. Here’s an extract from the speech’s transcript:

In our December 2020 … statement, we indicated, and have reaffirmed since then, that we will maintain the pace of Treasury and MBS purchases at $80 billion and $40 billion per month, respectively, until “substantial further progress” has been made toward our maximum-employment and price-stability goals. Since then, the economy has made progress toward these goals. At our meeting last week, the [Fed’s monetary policy] Committee reviewed some considerations around how our asset purchases might be adjusted, including their pace and composition, once economic conditions warrant a change. Participants expect that the economy will continue to move toward our standard of “substantial further progress.” In coming meetings, the Committee will again assess the economy’s progress toward our goals.

— Board of Governors of the Federal Reserve System, “Outlooks, Outcomes, and Prospects for U.S. Monetary Policy,” Aug. 4, 2021

What that means

So Mr. Clarida’s speech actually said little that wasn’t already known. But top Fed people are masterful in their nuancing. And top Fed watchers found reasons to think he was being more “hawkish” (more aggressive and economically conservative) than his colleagues have publicly been so far. Hawkish was the word The Financial Times used this morning to describe his speech.

The last time the Fed was buying boatloads of MBSs was back in 2013. And, when the then-Fed chair signaled to a Congressional committee that the plan was to “taper” (gradually reduce) those purchases, mortgage rates shot up. Investors didn’t wait for the tapering to begin. They responded to the signal with what came to be known as a “taper tantrum.”

Now, personally, I doubt that Mr. Clarida’s speech was the sort of strong signal needed to drive mortgage rates higher in a sharp and sustained way. And I suspect that it will result in a blip on the rate chart rather than the start of a new trend. But anything’s possible.

What we do know now is that the Fed is moving — seemingly inexorably — toward the tapering of its purchases of MBSs. And, barring some economic catastrophe, it’s only the timing that’s in doubt. When it happens, that’s going to be bad news for those who like low mortgage rates.

For more background, read Saturday’s weekend edition of this column.

Mortgage rates and inflation: Why are rates going up?

Recently — Updated today

Over much of 2020, the overall trend for mortgage rates was clearly downward. And a new, weekly all-time low was set on 16 occasions last year, according to Freddie Mac.

The most recent weekly record low occurred on Jan. 7, when it stood at 2.65% for 30-year fixed-rate mortgages. But then the trend reversed and rates rose.

However, those rises have been mostly replaced by falls since April, though typically small ones. Freddie’s Aug. 5 report puts that weekly average at 2.77% (with 0.6 fees and points), down from the previous week’s 2.80%.

Expert mortgage rate forecasts

Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.

And here are their current rate forecasts for the remaining quarters of 2021 (Q3/21 and Q4/21) and the first two quarters of 2022 (Q1/22 and Q2/22).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on July 19, Freddie’s on July 15 and the MBA’s on July 21.

Forecaster Q3/21 Q4/21 Q1/22 Q2/22
Fannie Mae 3.0% 3.1%  3.2% 3.2%
Freddie Mac 3.3% 3.4%  3.5% 3.6%
MBA 3.2% 3.4%  3.8% 4.0%

However, given so many unknowables, the current crop of forecasts might be even more speculative than usual.

All these forecasts expect higher mortgage rates soon. But the differences between the forecasters are stark. And it may be that Fannie isn’t building in the Federal Reserve’s tapering of its support for mortgage rates while Freddie and the MBA are.

Find your lowest rate today

Some lenders have been spooked by the pandemic. And they’re restricting their offerings to just the most vanilla-flavored mortgages and refinances.

But others remain brave. And you can still probably find the cash-out refinance, investment mortgage or jumbo loan you want. You just have to shop around more widely.

But, of course, you should be comparison shopping widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:

Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan.

Verify your new rate (Oct 18th, 2021)

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.