Today’s mortgage and refinance rates
Average mortgage rates Inched lower again yesterday. It was the third day in a row on which they’ve fallen. And yet each decrease has been so tiny that they’re still slightly higher than they were a week ago.
A headline on CNBC’s website yesterday said, “Russia’s Ukraine threat and worries on Fed rate hikes could make for a turbulent week in markets.” And, with so much depending on things I can’t possibly know, I’m going to duck my usual prediction for the coming week. Instead, I’ll say mortgage rates next week are unpredictable.
Key markets are closed on Monday for Presidents Day. So our daily rates report will be back on Tuesday.
Current mortgage and refinance rates
|Conventional 30 year fixed|
|Conventional 30 year fixed||4.133%||4.155%||Unchanged|
|Conventional 15 year fixed|
|Conventional 15 year fixed||3.277%||3.306%||-0.05%|
|Conventional 20 year fixed|
|Conventional 20 year fixed||3.86%||3.893%||-0.02%|
|Conventional 10 year fixed|
|Conventional 10 year fixed||3.404%||3.47%||-0.03%|
|30 year fixed FHA|
|30 year fixed FHA||4.282%||5.047%||+0.01%|
|15 year fixed FHA|
|15 year fixed FHA||3.713%||4.335%||+0.01%|
|30 year fixed VA|
|30 year fixed VA||3.96%||4.162%||+0.05%|
|15 year fixed VA|
|15 year fixed VA||3.223%||3.553%||-0.03%|
|5/1 ARM VA|
|5/1 ARM VA||4.75%||3.886%||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.|
Should you lock a mortgage rate today?
What do you do when everything is so unpredictable? Lock or float your mortgage rate?
Well, as Dirty Harry might have put it, “Do you feel lucky?” Mortgage rates may well fall next week if Russia invades Ukraine, though probably relatively briefly. But if that standoff de-escalates, they’re more likely to rise.
Your decision really is down to your appetite for risk. Just be aware that your chances of success and the stakes you might be playing with are very hard to estimate.
Those of us who are more cautious may prefer to lock as soon as possible. And I count myself among those.
So 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
Far from de-escalating, the situation on Ukraine’s borders is tenser than ever. And, yesterday, President Joe Biden warned that he is “convinced” that an invasion will come within days. Worse, we’re not talking about a limited incursion here. US intelligence expects targets to include Kyiv, the Ukrainian capital.
It’s worth recalling that the former KGB officer who is Russian President Vladimir Putin is a master of disinformation, distraction and deceit. And it’s perfectly possible that he is deliberately misleading the world in general and the intelligence community in particular.
But it would be unwise to bank on that. And, right now, the most likely scenario seems to be a full-scale invasion and some form of occupation, perhaps directly or through a puppet leader.
Yesterday, I explained why lower mortgage rates might last a relatively short time were Russia to invade Ukraine. Briefly, Russia is a major exporter of oil and natural gas, especially to parts of Europe. And post-invasion sanctions would likely reduce the country’s exports of those products, causing a global shortage of them.
Naturally, a shortage of any product causes prices to spike. And many expect world oil prices to rise well above $100 a barrel. They were already up at $91.66 yesterday, partly in anticipation of an invasion.
High oil prices have an especially damaging impact on inflation. Not only do many products use materials derived from oil but pretty much all goods are made, packaged and transported using fossil fuels.
So higher oil prices will fuel higher inflation. And mortgage rates almost always rise as inflation does. In other words, any fall in those rates caused by the disruption and uncertainty of an invasion might last only for the short term. Soon enough, they’ll probably move higher again. Unless, of course, NATO were to U-turn and decide to intervene militarily, causing a sustained war.
Meanwhile, of course, inflation is the current obsession of the Federal Reserve. Yesterday, various top Fed officials, including New York Fed President John Williams, were tamping down expectations of a 0.5% rate hike next month.
The overall message was that the Fed was determined to get on top of inflation. But that it would calibrate its measures to suit the needs of the wider economy.
That might have calmed markets yesterday. However, everyone knows there are some powerful voices within the Fed (notably St. Louis Fed President James Bullard) who are advocating for more aggressive action. We’ll have to wait until March 16 to be sure who wins, which is when it will announce its decision.
But we can be pretty sure that the more aggressive the Fed gets in countering inflation, the higher mortgage rates are likely to rise.
Economic reports next week
Friday brings an economic report that the Fed treats extremely seriously. That’s the personal income and outlays report, which includes the personal consumption and expenditures (PCE) inflation measure.
The potentially most important reports, below, are set in bold. The others are unlikely to move markets much unless they contain shockingly good or bad data.
- Tuesday — December home price indexes from both S&P Case-Shiller and the Federal Housing Finance Agency. Plus the February consumer confidence index
- Thursday — Gross domestic product revision for Q4 2021 (not expected to change). Plus weekly new claims for unemployment insurance to Feb. 19
- Friday — January personal income and outlays report. Plus February’s consumer sentiment index
Friday is the big day next week.
Mortgage interest rates forecast for next week
Nothing’s changed since last week because the Ukrainian situation continues to be uncertain. And, once again, rates really could go either way over the next seven days.
Mortgage and refinance rates usually move in tandem. And the scrapping of the adverse market refinance fee last year 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, conforming, 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.