Today’s mortgage and refinance rates
Average mortgage rates inched lower yesterday. And there was an enormous fall on Wednesday. Still, those rates closed on Friday evening a little higher than they did the Friday before.
For years, I provided forecasts of mortgage rate movements for each coming week. But, for most of this year, that’s been impossible. These rates are simply too volatile and unpredictable. Apologies.
Current mortgage and refinance rates
|Conventional 30 year fixed|
|Conventional 30 year fixed||7.091%||7.12%||+0.17%|
|Conventional 15 year fixed|
|Conventional 15 year fixed||6.094%||6.153%||-0.29%|
|Conventional 20 year fixed|
|Conventional 20 year fixed||7.179%||7.236%||-0.08%|
|Conventional 10 year fixed|
|Conventional 10 year fixed||6.407%||6.525%||+0.27%|
|30 year fixed FHA|
|30 year fixed FHA||7.097%||7.787%||+0.09%|
|15 year fixed FHA|
|15 year fixed FHA||7.083%||7.359%||+0.59%|
|30 year fixed VA|
|30 year fixed VA||6.719%||6.953%||+0.1%|
|15 year fixed VA|
|15 year fixed VA||6.125%||6.483%||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?
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.
Is there a chance of sustained and significant falls in mortgage rates over the rest of this year? Yes, but I’d suggest it’s a long shot. Absent some earth-shattering event, I suspect they’ll probably remain elevated over that period.
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 own tolerance for risk help guide you.
What’s moving current mortgage rates
This time last week, I was expecting mortgage rates this week to move as a result of yesterday’s inflation report. But markets appeared to shrug that off.
Instead, those rates were highly volatile as a result of events thousands of miles away in the United Kingdom. A new government there under Prime Minister Liz Truss has embarked on a radical course of action. And markets didn’t like its plans one bit.
There were two reasons for this dislike. First, Chancellor Kwasi Kwarteng (the UK’s equivalent of our treasury secretary) unveiled a budget on Sep. 23 that included significant and unfunded tax cuts. The implication at the time was that these would be paid for by additional borrowing, though there now seem to be new plans for spending cuts to cover at least some of the costs.
The second reason markets responded with extreme negativity was the lack of any analysis of the economic consequences of the budget. By law, British chancellors must publish an economic analysis of all budgets by independent watchdog the Office for Budget Responsibility. Mr. Kwarteng ducked that requirement by simply giving his budget another name: a “fiscal event.” This transparent evasion was the only transparency on show that day.
Markets hate this sort of uncertainty. And they responded savagely. At one point, Britain’s currency briefly dipped to an all-time low against the US dollar. And the price of government borrowing soared to such an extent that some pension funds were close to collapse.
That prompted the Bank of England (the UK’s equivalent of our Federal Reserve) to step in by agreeing to buy up to £5 billion ($5.58 billion) of British treasury bonds (“gilts,” in UK jargon) every day until Oct. 14. It had only just decided to start “quantitative tightening,” which involved selling its stock of gilts. So this was a screeching U-turn.
Although the Bank of England’s move calmed markets considerably, they still view the new British government with deep suspicion. The UK is the world’s fifth biggest economy, so this whole episode has been highly disruptive.
What’s this got to do with American mortgage rates?
People and institutions that hold bonds frequently have holdings across many countries. And major disruption in one bond market tends to affect them all.
Mortgage rates are largely determined by a type of bond, the “mortgage-backed security” (MBS). And the crisis of confidence in British gilts created a knock-on effect in US bonds, including MBSs.
The Bank of England’s intervention is supposed to last only two more weeks. If it needs to extend that, expect further issues.
And we may not have to wait that long. Far from backing down, the UK government is doubling down, even denying that its budget had anything to do with a plunging pound and skyrocketing interest rates.
So this story may have legs. And American mortgage rates may yet be further disrupted by London’s antics.
Closer to home
Here at home, the Federal Reserve continues to make it clear that it will maintain its program of rate hikes until it has several months of evidence of falling inflation. And that almost inevitably means rate hikes into 2023. That’s the main reason I think mortgage rates are unlikely to fall far, at least for long, over the coming months.
Yes, a serious recession could exert downward pressure on those rates. But, so far, the American economy is proving highly resilient, despite other nations experiencing slowdowns and other economic issues. So, if a US recession is coming at all, it looks months away.
That’s not to say mortgage rates won’t fall at all. Some rises and falls are inevitable.
And mortgage rates are currently much higher than anyone expected. So, they may move a bit lower into a more comfortable range. But people have been forecasting such a move for a long time, while rates themselves have continued to ratchet up. So, you’d be brave to bank on falls.
Of course, nobody knows with certainty what’s going to happen to mortgage rates next. And only you can decide when to lock your rate based on your reading of the situation and your tolerance for risk. Here are some expert views that might help you.
Economic reports next week
The important economic reports next week concern employment. This is critical because it’s an indicator of how the economy’s holding up and whether a recession is looming. By far the most important of these is the employment situation report for September, which is due out next Friday morning.
In the following list, key reports are in bold. Others next week are unlikely to move markets or mortgage rates much unless they contain shockingly good or bad data.
- Monday — September manufacturing index from the Institute for Supply Management (ISM). Plus August construction spending
- Tuesday — August job openings and labor turnover survey (JOLTS). Plus that month’s factory orders
- Wednesday — September ADP employment report (private sector). Plus that month’s ISM services index
- Thursday — Weekly new claims for unemployment insurance to Oct. 1
- Friday — September employment situation report, including nonfarm payrolls, unemployment rate and average hourly earnings
Once again, Friday is the crucial day next week.
Mortgage interest rates forecast for next week
Unfortunately, I’m still not in a position to hazard a guess about what will happen to mortgage rates over the next seven days.
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 inflation rates can undermine those tendencies.
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.