Mortgage and refinance rates today, August 4, 2021

Peter Warden
The Mortgage Reports editor

Today’s mortgage and refinance rates 

Average mortgage rates edged yet lower yesterday. I wouldn’t have believed it possible, but just a day or two of further falls could see them match or beat the all-time low. However, those good days aren’t assured. And rate increases are roughly as likely as decreases.

However, mortgage rates today look likely to fall again. That prediction is based on early movements in markets and those could change during the day.

Find and lock a low rate (Oct 17th, 2021)

Current mortgage and refinance rates 

Program Mortgage Rate APR* Change
Conventional 30 year fixed
Conventional 30 year fixed 2.686% 2.686% 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 1.804% 1.823% +0.01%
30 year fixed FHA
30 year fixed FHA 2.563% 3.214% Unchanged
15 year fixed FHA
15 year fixed FHA 2.341% 2.94% +0.02%
5/1 ARM FHA
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 2.12% 2.44% +0.12%
5/1 ARM VA
5/1 ARM VA 2.492% 2.383% 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 17th, 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?

Yesterday, we quoted Mortgage News Daily’s figures to show how close current mortgage rates were to their all-time low. Today, they’re even closer: 2.78% compared to that record of 2.75%.

Freddie Mac’s numbers will likely be different when it updates its weekly rates tomorrow. Because the two organizations have different methodologies. But they’re also likely to show these rates as very close to their record.

But beware! Mortgage rates often bounce back from sustained falls of the sort we’re seeing. So monitor rates closely if you’re surfing this particular wave. And be ready to lock in an instant. 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 fell to 1.13% from 1.16%. (Good 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 mostly lower shortly after opening. (Good 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 decreased to $68.29 from $69.64 a barrel. (Good for mortgage rates*.) Energy prices play a large role in creating inflation and also point to future economic activity. 
  • Gold prices rose to $1,834 from $1,816 an ounce. (Neutral 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 indexheld steady at 27 out of 100. (Neutral 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 fall. 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 17th, 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

As you know, current mortgage rates are extraordinarily low. I wish I could just sit back and celebrate with you. But I can’t get past the suspicion that this happy situation can’t last long.

Things were very different for much of last year and in the first week of 2021. New all-time lows were being set then once or twice a month on average. And that made sense. The first waves of the pandemic were wreaking economic havoc. And we even had a brief recession. So it made sense that mortgage rates were falling. They tend to be low when the economy’s struggling and high when it’s doing well.

But 2020’s pressures don’t apply now. Indeed, we’re in the midst of an economic boom. And they really should be rising.

Federal Reserve could push mortgage rates higher

Meanwhile, the Federal Reserve is keeping mortgage rates artificially low by buying $40 billion of mortgage-backed securities (MBSs) each month. These MBSs, which are a type of bond, directly determine mortgage rates.

But every time mortgage rates drop, that piles pressure on the Fed to “taper” (gradually reduce) those purchases. Many economists accuse it of fueling home price inflation by driving mortgage rates lower. And they want it to stop tinkering in a market that clearly doesn’t need its support.

So far, the Fed’s resisted calls for it to taper its purchases of MBSs. But many observers expect it to cave in before the end of the year. And a few think it might do so at the Jackson Hole Symposium near the end of this month, on Aug. 26-28.

Tapering sounds such a gentle process. But the last time the Fed signaled that it was going to taper a similar buying program, in 2013, mortgage rates shot up in a very short time. Investors didn’t wait for the tapering to begin. They responded immediately to the signal.

Sorry to rain on your parade. And, of course, I might be wrong in my analysis. But I can’t shift this feeling of impending doom. Well, of impending higher mortgage rates, anyway.

What this means for you

The good news is that you can currently lock your mortgage at a historically low rate. And one that’s so close to the all-time low that you’d barely notice the difference in your monthly payments.

Doing so today means you risk losing out if they carry on downward. But it also means you avoid the risk of their rising. What you decide to do next depends on how hard you’d kick yourself in each of those scenarios.

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

Mortgage rates and inflation: Why are rates going up?

Recently

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 were mostly replaced by falls since April, though typically small ones. Freddie’s July 29 report puts that weekly average at 2.8% (with 0.7 fees and points), up from the previous week’s 2.78%.

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 17th, 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.