Mortgage and refinance rates today, Sep. 22, 2022

Today’s mortgage and refinance rates

Average mortgage rates fell appreciably yesterday. It was the first drop in seven business days and very welcome indeed. However, Wednesday’s fall wiped out only Monday’s and Tuesday’s rises.

So far this morning, it’s looking as if mortgage rates today might rise modestly. But that could change as the hours pass.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Don't lock on a day when mortgage rates look set to fall. My recommendations (below) are intended to give longer-term suggestions about the overall direction of those rates. So, they don’t change daily to reflect fleeting sentiments in volatile markets.

I agree with The Wall Street Journal (paywall), which yesterday said, “additional [Federal Reserve] rate increases would likely push mortgage rates even higher.”

Given that further such hikes look all but inevitable, 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

>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 climbed to 3.66% from 3.54%. (Very bad for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields
• Major stock indexes were mostly falling soon after opening. (Sometimes good 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 increased to $85.75 from $85.09 a barrel. (Bad for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
• Gold prices edged higher to $1,685 from $1,682 an ounce. (Neutral for mortgage rates*.) It is generally 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 — fell to 33 from 39 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 movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. 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 rise. However, 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:

1. 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’
2. Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
3. Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
4. When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
5. Refinance rates are typically close to those for purchases.

A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.

Are mortgage and refinance rates rising or falling?

Yesterday, I predicted three outcomes from that afternoon’s Federal Reserve events. A:

1. 75-basis-point (0.75%) hike
2. “Higher for longer” rates policy, as forecast by the FT
3. Holding of the hawkish line by Mr. Powell, who’s shown no appetite for U-turns so far this year

And I was right — he said proudly — on each count. But I was wrong — he said less proudly — about their impact on mortgage rates. Those rates fell when I had thought they’d rise on the news.

Recession fears

So what happened? I think Fed Chair Jerome Powell frightened investors by acknowledging more explicitly than before that the Fed’s rate hikes could lead to a painful recession.

I’m still not sure why that should be a surprise. Mr. Powell has frequently expressed his admiration for one of his predecessors, Paul Volcker. It was Mr. Volcker who finally tamed inflation in the early 1980s when he was the Fed chair. And he did so at the cost of a savage recession. The Associated Press described what happened:

“In the early 1980s, Volcker was vilified by the public for having triggered a severe recession in order to curb runaway price increases. Home builders put postage stamps on bricks and on 2-by-4 wooden planks and mailed them to the Fed to protest how super-high interest rates had wrecked their businesses. Auto dealers, stuck with lots full of unsold cars, did the same with car keys. Angry farmers, struggling with high debts, drove their tractors to Washington and blockaded the Fed’s headquarters.”

Don’t panic

Now, nobody’s expecting a replay of that downturn anytime soon. It pushed the unemployment rate up to 10.8% in November and December 1982. And Mr. Volcker presided over a federal funds rate of a record 20%.

But the Fed said Wednesday it expected the unemployment rate to rise to 4.4% next year from its current 3.7%. And that means about 1.3 million lost jobs, a number Mr. Powell referred to as “relatively modest.”

With luck, any recession over the next year will be brief and relatively shallow. But Mr. Powell acknowledged the current high levels of uncertainty:

No one knows whether this process will lead to a recession or, if so, how significant that recession will be.

— Jerome Powell, Fed news conference, Sep. 21, 2020

What’s next?

Everything that happened yesterday was entirely predictable. Heck, even I managed to call it right.

So, I’m not sure markets will sustain their knee-jerk reaction once they have a chance to reflect on the fact that nothing much has changed. If I’m right, mortgage rates may soon begin to edge higher again. But let’s hope I’m wrong about the direction of those rates — again.

Read the weekend edition of this daily article for more background.

Recent trends — 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 that year, according to Freddie Mac.

The most recent weekly record low occurred on Jan. 7, 2021, when it stood at 2.65% for 30-year fixed-rate mortgages.

Freddie’s Sep. 22 report put that same weekly average for conventional, 30-year, fixed-rate mortgages at 6.29% (with 0.9 fees and points), up from the previous week’s 6.02%. That won’t have picked up Sep. 21’s fall.

Note that Freddie expects you to buy discount points (“with 0.8 fees and points”) on closing that earn you a lower rate. If you don’t do that, your rate would be closer to the ones we and others quote.

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 two quarters of 2022 (Q3/22, Q4/22) and the first two quarters of next year (Q1/23, Q2/23).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s forecast appeared on Sep. 21 and the MBA’s on Sep. 20. Freddie’s came out around Jul. 21. But it now releases forecasts only quarterly. So, its figures soon turn stale.

Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive. Personally, I think they’re too optimistic.

Find your lowest rate today

You should comparison shop 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.