Today’s mortgage and refinance rates
Average mortgage rates rose yesterday, breaking a run of three consecutive days of falls. But that increase was relatively small, barely making a dent in those recent gains. However, at one point, that day’s rise looked likely to be much bigger than it turned out to be. Because markets were spooked by the first US case of the Omicron variant.
And key markets remain as unpredictable today. But, so far this morning, it’s looking as if mortgage rates today might hold steady or just inch either side of the neutral line. Let’s see how long that lasts.
Current mortgage and refinance rates
|Conventional 30 year fixed|
|Conventional 30 year fixed||3.293%||3.312%||Unchanged|
|Conventional 15 year fixed|
|Conventional 15 year fixed||2.684%||2.713%||-0.03%|
|Conventional 20 year fixed|
|Conventional 20 year fixed||3.169%||3.2%||+0.03%|
|Conventional 10 year fixed|
|Conventional 10 year fixed||2.646%||2.704%||-0.04%|
|30 year fixed FHA|
|30 year fixed FHA||3.324%||4.089%||-0.05%|
|15 year fixed FHA|
|15 year fixed FHA||2.595%||3.24%||+0.06%|
|5/1 ARM FHA|
|5/1 ARM FHA||2.202%||3.094%||-0.08%|
|30 year fixed VA|
|30 year fixed VA||3.158%||3.352%||-0.04%|
|15 year fixed VA|
|15 year fixed VA||2.734%||3.075%||-0.04%|
|5/1 ARM VA|
|5/1 ARM VA||2.445%||2.394%||-0.01%|
|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.|
Should you lock a mortgage rate today?
I reckon we’re likely to see heightened volatility in mortgage rates for some time to come. And that means upward movements as well as downward ones.
Still, I’m hoping for a period when these rates will fall overall. But that will depend on the news that emerges concerning the Omicron variant of COVID-19. The bigger the threat that variant poses, the further rates are likely to drop.
And, for now, my personal rate lock recommendations remain:
- FLOAT if closing in 7 days
- FLOAT if closing in 15 days
- FLOAT if closing in 30 days
- FLOAT if closing in 45 days
- FLOAT if closing in 60 days
>Related: 7 Tips to get the best refinance rate
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 1.43% from 1.48%. (Good for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields
- Major stock indexes were higher soon 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. But this is an imperfect relationship
- Oil prices fell to $64.78 from $68.46 a barrel. (Good for mortgage rates*.) Energy prices play a large role in creating inflation and also point to future economic activity
- Gold prices decreased to $1,770 from $1,788 an ounce. (Neutral for mortgage rates*.) In general, it is 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 — tumbled to 23 from 30 out of 100. (Good 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, mortgage rates today look likely to be unchanged or barely changed. 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 a lot is 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?
If markets pick up on news from South Africa overnight, we might see a further fall in mortgage rates today. Because it included discouraging Omicron data. However, so far, investors seem to have barely noticed it.
According to South Africa’s National Institute for Communicable Diseases (NICD), COVID-19 daily infection rates have recently been rising “exponentially” in that country. Yesterday, there were 8,561 new cases. Just one week earlier, there had been 1,275. And there’s no “winter wave” to explain away that increase. It’s summer in the southern hemisphere.
But, more worryingly, 74% of all the virus genomes the NICD had sequenced in the last month were Omicron ones. I’m no public health researcher, but doesn’t that imply that the new variant is highly transmissible?
If enough investors pick up on the news, and make the same inference I did (they’re not public health researchers either), then mortgage rates today might fall.
As of the small hours of this morning, Omicron had been confirmed in 24 countries on five continents, including the United States.
More than just Omicron
Omicron might ultimately change everything. But it’s most likely to do so if it turns out to be highly resistant to existing vaccines. And we won’t know about that for some time. Certainly, experts are divided over the issue, with probably most thinking any extra resistance is likely to be small.
But whatever the data ultimately prove, there are other forces that are still trying to push mortgage rates higher. Three key ones spring to mind:
- Inflation — An investor buying a mortgage-backed security (the type of bond that largely determines mortgage rates) knows that inflation is going to eat up all his or her profit (yield) — and then some
- The Federal Reserve — The Fed’s been keeping mortgage rates artificially low for 20 months. But it’s announced plans to gradually withdraw that support over six months. Now, it’s hinting it may shorten that timetable
- Debt ceiling — If Congress doesn’t raise the debt ceiling within a couple of weeks, the US Treasury is likely to begin to default on its debts. That truly is unthinkable
Here’s why ...
Crisis looming over debt ceiling
The last time the debt ceiling was under threat, in October, the White House contemplated the consequences:
... it is expected to be widespread and catastrophic for the U.S. (and global) economy. Given that the U.S. Treasury is the global benchmark safe asset, a default would likely cause a financial crisis and recession. GDP would fall, unemployment would rise, and everyday households would be affected in a number of ways — from not receiving important social program payments like Social Security or housing assistance, to seeing increased interest rates on mortgages and credit card debt.— The White House, "The Debt Ceiling: An Explainer," Oct. 6, 2021
Note that mention of “increased interest rates on mortgages.” If Congress fails to raise the debt ceiling before the Treasury runs out of money, that could cause an economic catastrophe that dwarfs even the worst-case scenarios that Omicron could bring.
Just as this daily report was about to be posted, The Wall Street Journal reported:
Democrats and Republicans reached an agreement to extend government funding through Feb. 18, taking the first step toward avoiding a government shutdown this weekend.— WSJ, "Democrats and Republicans Reach Deal to Try to Prevent Government Shutdown" (paywall), Dec. 2, 2021
But I haven’t had a chance to explore the details of that deal. And, for now, it’s Omicron that investors are focused on.
For more background, read Saturday’s weekend edition of this daily report.
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.
Since then, the picture has been mixed with extended periods of rises and falls. Unfortunately, since September, the rises have grown more pronounced, though not consistently so.
Freddie’s Dec. 2 report puts that weekly average for 30-year, fixed-rate mortgages at 3.11% (with 0.6 fees and points), slightly up from the previous week.
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, current quarter of 2021 (Q4/21) and the first three quarters of 2022 (Q1/22, Q2/22 and Q3/22).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were published on Nov. 18 and the MBA’s on Nov. 22.
Freddie’s were released on Oct. 15. It now updates its forecasts only quarterly. So we may not get another from it until January.
However, given so many unknowables, the whole current crop of forecasts may be even more speculative than usual.
And none of these forecasters had any idea that Omicron might entirely change the models on which they’re based.
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.