Today’s mortgage and refinance rates
Average mortgage rates fell yesterday. But only by the smallest measurable amount. And, according to Mortgage News Daily’s archive, those for 30-year, fixed-rate, conventional mortgages closed on Friday precisely where they were the previous Friday.
Unfortunately, mortgage rates remain fundamentally unpredictable. Next Wednesday, a key, two-day Federal Reserve meeting will report some decisions that are critical to those rates. And, of course, medical data concerning the Omicron variant of COVID-19 might emerge, and they, too, might have an impact. More on both, below.
Current mortgage and refinance rates
|Conventional 30 year fixed|
|Conventional 30 year fixed||3.302%||3.322%||Unchanged|
|Conventional 15 year fixed|
|Conventional 15 year fixed||2.525%||2.558%||Unchanged|
|Conventional 20 year fixed|
|Conventional 20 year fixed||3.154%||3.194%||Unchanged|
|Conventional 10 year fixed|
|Conventional 10 year fixed||2.617%||2.683%||-0.01%|
|30 year fixed FHA|
|30 year fixed FHA||3.289%||4.054%||-0.01%|
|15 year fixed FHA|
|15 year fixed FHA||2.596%||3.242%||Unchanged|
|5/1 ARM FHA|
|5/1 ARM FHA||2.295%||3.175%||Unchanged|
|30 year fixed VA|
|30 year fixed VA||3.223%||3.421%||Unchanged|
|15 year fixed VA|
|15 year fixed VA||2.877%||3.225%||+0.02%|
|5/1 ARM VA|
|5/1 ARM VA||2.507%||2.539%||-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?
Really, I can offer very little reliable guidance on when to lock your rate. Because we’re waiting on two things that could push mortgage rates in either direction. Read the “What’s moving mortgage rates” section (below) for details.
That means that your decision is mostly down to your personal tolerance for risk. If you’re financially conservative, lock your rate soon. If you’re happy to take a gamble on rates falling, carry on floating.
Being a cautious type, I changed my personal rate lock recommendations earlier this week. And they’re now:
- 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
The Federal Reserve
The Federal Open Market Committee (FOMC) begins a two-day meeting next Tuesday (Dec. 14) and will hold a news conference early on Wednesday afternoon.
The FOMC is the Fed’s monetary policy body and its utterances are hugely important to markets generally, including the one in which mortgage-backed securities (MBSs) are traded. And MBSs largely determine mortgage rates.
Since March 2020, the Fed has been buying MBSs at a rate of $40 billion a month. And that’s been keeping mortgage rates artificially low.
But, as inflation grew as a problem, the Fed announced that it would gradually reduce those purchases, starting last month. In a process called “tapering,” it planned to take its monthly purchases down to zero by mid-2020.
But yesterday’s consumer price index showed prices rising at their fastest rate since 1982. And that’s putting pressure on the Fed to announce next Wednesday that it will reduce its MBS purchases more quickly, perhaps ending them in March or April. It may also that day signal that it will hike its own interest rates sooner than planned.
Of course, we don’t know what the Fed will say on Wednesday. But, if it does announce either or both those measures, that will likely push mortgage rates upward.
Markets seem to have put away their concerns about the Omicron variant, at least for now. But that doesn’t mean that chapter’s closed.
True, early signs suggest the new variant may tend to bring less harmful health outcomes for most patients than earlier ones. But, if it spreads as quickly as looks likely, that may not matter much from the point of view of hospitalization and death rates. Because a small proportion of a huge number can be a very high raw number.
The UK is only days ahead of us in terms of infections. And, on Wednesday, the British health secretary told parliament that the country was bracing for 1 million Omicron infections by the end of this month, according to The Guardian. Allowing for population differences, and assuming a similar spread of the disease, that could mean 5 million Omicron cases here in early January.
If only a small proportion of those cases turn out to be serious enough to require hospitalizations, that might still be enough to overwhelm health care resources.
The good news is that booster vaccinations appear to provide real protection against serious health outcomes from Omicron. But fewer than 50 million Americans have received their boosters. So we have a way to go to head off the new variant.
Meanwhile, none of the data we’ve received so far is wholly reliable, because they’re all based on small samples. And, if Omicron turns out to have more serious economic implications than markets are currently assuming, then mortgage rates should fall.
What this means for mortgage rates
So, just as last week, we’ll just have to wait and see. Will the Fed push mortgage rates higher? Or will Omicron drag them lower? Nobody knows.
But we might be in for some volatility while the tussle between the two continues.
Economic reports next week
The FOMC meeting on Wednesday might turn out to have the biggest impact on mortgage rates next week. But there are some economic reports, too, that might move those rates.
The key ones below are in bold. And, of those, retail sales are most likely to affect mortgage rates.
But none of the other economic reports listed below is likely to cause much movement in markets unless it includes shockingly good or bad data:
- Tuesday — November producer price index
- Wednesday — November retail sales and import price index
- Thursday — November building permits and housing starts. And November industrial production index and capacity utilization. Plus weekly new claims for unemployment insurance to Dec. 11
Watch out for Wednesday.
Mortgage interest rates forecast for next week
Mortgage rates could go either way next week — or roughly hold steady. Unfortunately, nobody can predict either what the Fed might say or what might happen to Omicron.
Mortgage and refinance rates usually move in tandem. And a gap that had grown between the two has been largely eliminated by the scrapping of the adverse market refinance fee.
Meanwhile, another recent regulatory change has likely made mortgages for investment properties and vacation homes more accessible and less costly.
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. And 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, they’re 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:
Down payment assistance programs in every state for 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 result is a good snapshot of daily rates and how they change over time.