Today’s mortgage and refinance rates
Average mortgage rates nudged higher yesterday. And they’re now near the top of the narrow change within which they’ve been moving for a month or two. Read on to discover what happened. Meanwhile, Freddie Mac’s chief economist observed this morning, “Overall, rates continue to be low, with a window of opportunity for those who did not refinance under three percent.”
First thing this morning, key markets were signaling that mortgage rates today might rise again. But yesterday reminded us that those early signs aren’t always reliable.
Current mortgage and refinance rates
|Conventional 30 year fixed|
|Conventional 30 year fixed||2.811%||2.811%||Unchanged|
|Conventional 15 year fixed|
|Conventional 15 year fixed||2.054%||2.054%||+0.06%|
|Conventional 20 year fixed|
|Conventional 20 year fixed||2.49%||2.49%||Unchanged|
|Conventional 10 year fixed|
|Conventional 10 year fixed||1.884%||1.934%||+0.01%|
|30 year fixed FHA|
|30 year fixed FHA||2.688%||3.343%||Unchanged|
|15 year fixed FHA|
|15 year fixed FHA||2.431%||3.032%||+0.03%|
|5/1 ARM FHA|
|5/1 ARM FHA||2.5%||3.201%||Unchanged|
|30 year fixed VA|
|30 year fixed VA||2.303%||2.475%||+0.05%|
|15 year fixed VA|
|15 year fixed VA||2.25%||2.571%||Unchanged|
|5/1 ARM VA|
|5/1 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?
Does yesterday’s unexpected nudge upward in mortgage rates mean those rates are no longer becalmed? It’s too soon to reach that conclusion. But we may be in for a little more volatility than we’ve grown used to over the last month or so. Or a lot more, depending on what the Fed chair says in his speech tomorrow morning.
And that brings into focus the risks of continuing to float your rate. Yes, rates may fall back again. But I suspect rises are likely to outweigh the falls when measured over weeks and months. So I’d lock my rate soon if I were you. But I’m not. And you may have a higher appetite for risk than I do.
So, for now, my personal rate lock recommendations remain:
- LOCK if closing in 7 days
- LOCK if closing in 15 days
- LOCK 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 edged up to 1.36% from 1.31%. (Bad for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields
- Major stock indexes were mixed shortly after opening. (Neutral 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 dropped to $67.30 from $67.56 a barrel. (Neutral for mortgage rates*.) Energy prices play a large role in creating inflation and also point to future economic activity.
- Gold prices inched down to $1,787 from $1,791 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 index — increased to 47 from 42 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.
Important notes on today’s mortgage rates
Here are some things you need to know:
- 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
- Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
- 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
- When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
- 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
The current received wisdom is that investors are keeping mortgage rates (and Treasury yields) low because they’re worried about the economic damage that the COVID-19 Delta variant might wreak.
To hedge against that, general investors are supposedly buying piles of mortgage-backed securities (MBSs — the type of bond that largely determines mortgage rates) and Treasury bonds, which pushes up their prices. And bond prices and yields invariably move inversely. So the higher the price, the lower the yield — or mortgage rate.
Voilà! That’s why mortgage rates are currently low, even though the economy is booming and inflation is higher than usual.
Or is it? How do you explain various stock indexes setting record highs on a regular basis if investors are cowering in the shadow of the Delta variant?
The role of banks
Yesterday, The New York Times suggested an alternative explanation. Under the headline, “Banks Are Bingeing on Bonds, but Not Because They Want To" (paywall), it suggested that banks are awash with deposits but currently have too few lending opportunities to place that money profitably. It continued:
So banks have largely been left to invest in one of the least lucrative assets around: government debt. Rates on Treasury bonds are still near historically low levels, but banks have been buying government debt like never before. In the second quarter of 2021, banks bought a record of about $150 billion worth of Treasurys, according to a note published this month by JPMorgan analysts.
Now take a moment and throw away your sodden tissue.
Almost certainly, some of the banks’ money has been invested in mortgage-backed securities, simply because investors often choose between those and Treasurys when they want ultrasafe, low-yield bonds. That’s why MBS yields typically shadow those of 10-year Treasury notes.
The Fed’s role
In addition to banks buying bonds, the Federal Reserve is purchasing even larger quantities. JPMorgan reckons banks are spending about $50 billion a month on Treasurys, which equals $150 billion a quarter. But the Fed’s buying $80 billion worth of Treasurys each month.
And the Fed’s MBS purchases alone cost $40 billion a month in new money, plus sometimes $60 billion in recycled funds. Add in the banks’ likely contribution and suddenly you can see why mortgage rates are currently so low at a time when they should normally be rising.
But the Fed has, in recent months, been signaling that it wishes to “taper” (slow and then stop) its purchases of MBSs and Treasurys. And, once it stops keeping mortgage rates artificially low, we’ll likely see them rise, even if banks keep buying at their current rate.
But nobody knows for sure when tapering will begin, beyond that it’s highly likely to happen within the next four months.
Powell speech tomorrow
And that brings us to Fed Chair Jerome Powell’s speech at 10 a.m. (ET) tomorrow morning. I’ve been trailing it all week because it could turn out to be crucial. That’s because investors around the globe will be parsing his every word in the hope of identifying hints as to when tapering might begin.
Time was when some thought Mr. Powell might actually announce the Fed’s whole tapering program during his speech. But that seems a smaller possibility now.
And it’s perfectly possible that he’ll choose not to drop even the vaguest hint. But, if he does intimate anything new about tapering, that probably will move mortgage rates — more likely upward, depending on what he says.
Indeed, yesterday’s rise in mortgage rates may be explained, at least in part, by investors positioning themselves ahead of that speech. And, if that’s the case, we may see more of the same today.
For more background, read Saturday’s weekend edition of this column. And my colleague Tim Lucas’s longer-term forecast, Mortgage interest rates forecast and trends: Will rates go down in September 2021?
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. 26 report puts that weekly average at 2.87% (with 0.6 fees and points), up from the previous week’s 2.86%.
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 and the MBA’s were updated on Aug. 19. But Freddie’s were last refreshed on July 15 because it now publishes these figures only quarterly.
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.
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.