Today’s mortgage and refinance rates
Average mortgage rates inched higher yesterday. But they edged lower over the whole week. Finally, they caught a break, though it was too small a one to make much difference.
Critical Federal Reserve announcements next Wednesday could send mortgage rates higher or lower — or leave them unchanged. Nobody has any idea what the Fed will say, so I’m going to dodge making a prediction for next week.
Current mortgage and refinance rates
|Conventional 30 year fixed|
|Conventional 30 year fixed||5.531%||5.557%||+0.02%|
|Conventional 15 year fixed|
|Conventional 15 year fixed||4.657%||4.686%||-0.02%|
|Conventional 20 year fixed|
|Conventional 20 year fixed||5.523%||5.56%||+0.01%|
|Conventional 10 year fixed|
|Conventional 10 year fixed||4.488%||4.546%||-0.01%|
|30 year fixed FHA|
|30 year fixed FHA||5.269%||5.972%||+0.01%|
|15 year fixed FHA|
|15 year fixed FHA||4.761%||5.193%||+0.13%|
|30 year fixed VA|
|30 year fixed VA||5.214%||5.431%||Unchanged|
|15 year fixed VA|
|15 year fixed VA||4.75%||5.094%||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?
I'd lock my rate on the first morning when mortgage rates look likely to rise. Recently, that’s been most mornings.
You could wait to lock your rate until Wednesday afternoon to see whether mortgage rates rise or fall in response to those critical Fed announcements (see below), which start at 2 p.m. (ET) that day. But that’s a gamble.
On the one hand, you could lose out if you wait and they climb sharply. On the other, you could lose out if you lock now and they fall.
Personally, I’m fairly cautious. So, my 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
Everyone’s known for weeks that the Federal Reserve will hike its federal funds rate by 0.5% next Wednesday. And the chances of it deviating from that stated intention are slim.
So you can forget that. Markets have already priced in that rate increase.
What could cause mortgage rates to tumble or soar that day is the Fed’s plans for running down its holdings of mortgage-backed securities (MBSs), the type of bond that largely determines mortgage rates. It has three main options for what it could do with its $2.72 trillion stockpile of those. It could:
- Continue to use income from its holdings to buy new MBSs, thus reducing its stockpile very, very slowly
- Bank the income from those holdings and let them dwindle just a bit more quickly
- Start actively selling its holdings at a pace it may or may not announce
If it goes for the first of those, mortgage rates might fall because markets have already baked in a more aggressive plan. The second option might see only minor movements as that’s what many investors are expecting.
But the third could push mortgage rates higher. Extra supply from the Fed in the mortgage bond market should drive prices lower (supply and demand 101). And, when it comes to all bonds, lower prices inevitably mean higher yields. For MBSs, higher yields mean higher mortgage rates.
So, watch out for media coverage on Wednesday afternoon of Fed announcements. It’s set to publish a statement at 2 p.m. (ET). And, 30 minutes later, Fed Chair Jerome Powell will host a news conference.
Nobody (probably not the Fed itself) knows for sure what will be announced next Wednesday. Personally, I think option three is more likely than many others seem to. But I’m basing that on recent aggressive rhetoric from top Fed officials.
And others have heard the same things and interpreted those remarks differently. So please don’t take my opinion too seriously.
Economic reports next week
By far the biggest potential impact on mortgage rates next week comes from those Fed policy announcements on Wednesday. But there are a couple of economic reports over the next seven days that could also sway those rates.
Next week’s reports focus on employment, and that’s been excellent in recent months. By far the most influential of those comes on Friday in the shape of April’s official employment situation report.
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.
- Monday — April Institute for Supply Management (ISM) manufacturing index
- Tuesday — March Job Openings and Labour Turnover Survey (JOLTS). Plus March factory orders
- Wednesday — Fed announcements. Plus April ADP employment report on private-sector jobs. And April ISM services index
- Thursday — Q1/22 productivity and unit labor costs. Plus weekly new claims for unemployment insurance to April 30
- Friday — April’s official employment situation report, including nonfarm payrolls, average hourly earnings and unemployment rate
Wednesday’s the big day. But Friday could be important, too.
Mortgage interest rates forecast for next week
Mortgage rates next week are essentially unpredictable. Sorry, but Wednesday’s Fed announcement is too big an unknown for me to stick my neck out.
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:
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.