Today’s mortgage and refinance rates
Average mortgage rates fell a little yesterday. The end of this week was kinder than the start. But mortgage rates still closed on Friday a little higher than they were seven days earlier.
The Federal Reserve will be issuing a report and hosting a news conference on Wednesday afternoon. And what it writes and says then could hugely affect markets’ moods. So I’m copping out today and saying that mortgage rates are unpredictable next week.
Current mortgage and refinance rates
|Conventional 30 year fixed|
|Conventional 30 year fixed||3.777%||3.801%||-0.01%|
|Conventional 15 year fixed|
|Conventional 15 year fixed||3.12%||3.156%||-0.02%|
|Conventional 20 year fixed|
|Conventional 20 year fixed||3.438%||3.479%||-0.08%|
|Conventional 10 year fixed|
|Conventional 10 year fixed||3.024%||3.089%||-0.03%|
|30 year fixed FHA|
|30 year fixed FHA||3.852%||4.628%||Unchanged|
|15 year fixed FHA|
|15 year fixed FHA||3.097%||3.749%||-0.03%|
|5/1 ARM FHA|
|5/1 ARM FHA||3.606%||3.956%||-0.02%|
|30 year fixed VA|
|30 year fixed VA||3.904%||4.113%||+0.02%|
|15 year fixed VA|
|15 year fixed VA||3.266%||3.607%||-0.02%|
|5/1 ARM VA|
|5/1 ARM VA||3.106%||2.937%||-0.03%|
|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?
Mortgage rates could fall next week, depending on what the Fed says. But they’re roughly as likely to rise.
In the longer run, I still think we might still see rates continue higher (though much more slowly than recently) for some time to come. But some experts disagree with me. So you have to live with even more uncertainty than usual.
Still, my personal rate lock recommendations remain:
- 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 let your gut and your personal tolerance for risk help guide you.
What’s moving current mortgage rates
Inflation is still going up. And the Federal Reserve is yet to do its worst for mortgage rates. Those related forces have been exerting upward pressure on mortgage rates for some time.
And, until they stop doing so, I can see little reason why those rates will do other than climb — though, with luck, more slowly than recently. Certainly, I’m not expecting significant or sustained falls anytime soon.
But others disagree. And they’re people whose opinions should command respect. Because they’re even more obsessed with mortgage rates than I am.
On Wednesday, Fannie Mae’s team of economists published its forecast for mortgage rates through 2022 and beyond. And I found my eyebrows rising as I read it.
Fannie reckons mortgage rates for 30-year, fixed-rate loans will average 3.2% over the first three months of this year. As I pointed out the following day, in the weekday version of this report, “on the day its figures were published, we reported those for conventional loans were already up to 3.87%.”
Others reckoned they were a bit lower. Freddie Mac put the weekly average for the relevant seven days at 3.56%, though the daily rate would have been higher by Wednesday. And Mortgage News Daily thought they were at 3.70%. Indeed, MND’s archive shows that those rates haven’t been as low as 3.2% on a single day so far this year.
Remember, Fannie’s forecast is an average over the entire quarter. So we’re not just looking at those rates dropping to 3.2%. They’d have to tumble to below that for a considerable period during the next two months to make up for the weeks when they’ve been so much higher.
The Mortgage Bankers Association’s (MBA’s) forecast, published Jan. 20, was pretty close to Fannie’s: 3.3% for the current quarter. And Freddie’s, also out on Jan 20, expects 3.5%.
Each of those publications gives forecasts for the rest of this year and beyond. Here’s where they think mortgage rates will be in the October — December 2022 quarter:
- Fannie Mae — 3.4%
- Freddie Mac — 3.7%
- MBA — 4.0%
To my mind, those, too, are wildly optimistic. Indeed, I wouldn’t be surprised to see 4% rates during the current quarter, though not as a three-monthly average.
So is my pessimism misplaced? I don’t see why. But you should certainly bear in mind that highly respected and undeniably expert opinions fundamentally disagree with me.
Economic reports next week
Next week is a big one for economic reports. There are gross domestic product figures on Thursday, and many versions of data about inflation, personal incomes and consumer spending on Friday.
But Wednesday may be the most important day. That’s when the Fed’s Federal Open Market Committee (FOMC) releases a report (2 p.m. (ET)) and hosts a news conference (30 minutes later). And investors are already on tenterhooks about what will be said.
The most important reports, below, are set in bold. The others are unlikely to move markets much unless they contain shockingly good or bad data.
- Monday — Markit purchasing manager indexes (PMIs) for the manufacturing and services sectors for January. (“Flash” reports, meaning they’re early readings and subject to change)
- Tuesday — January consumer confidence index. Plus November home price indexes from S&P Case-Shiller and from the FHFA
- Wednesday — FOMC statement and news conference
- Thursday — Gross domestic product for the last quarter of 2021 (first of three readings). And December orders for durable goods and core capital equipment. Plus weekly new claims for unemployment insurance to Jan. 22
- Friday — December personal consumption expenditure (PCE) index with real disposable incomes, real consumer spending and related data such as personal income and spending. Plus January consumer sentiment index
Monday and Tuesday may be fairly calm. But there’s a chance of fireworks from Wednesday onward.
Mortgage interest rates forecast for next week
The Federal Reserve’s activities next Wednesday are so pivotal to markets that I have to say mortgage rates next week are unpredictable. Sorry, but there’s really no point in flat-out guessing.
Mortgage and refinance rates usually move in tandem. And the scrapping of the adverse market refinance fee has largely eliminated a gap that had grown between the two.
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) that lenders will quote you. 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.