Today’s mortgage and refinance rates
Average mortgage rates increased moderately yesterday. And they climbed appreciably over the week. So, they’re now at a fresh 20-year high, according to Mortgage News Daily.
Unfortunately, I’m still not in a position to provide a forecast for those rates over the coming seven days. Markets are moving too far, too fast and too haphazardly for me to provide any worthwhile prediction.
Bond markets are closed next Monday for the Columbus Day holiday. And mortgage rates shouldn't change that day. So, we'll be back next Tuesday.
Current mortgage and refinance rates
|Conventional 30 year fixed|
|Conventional 30 year fixed||7.184%||7.215%||-0.02%|
|Conventional 15 year fixed|
|Conventional 15 year fixed||6.567%||6.603%||+0.18%|
|Conventional 20 year fixed|
|Conventional 20 year fixed||7.262%||7.324%||+0.08%|
|Conventional 10 year fixed|
|Conventional 10 year fixed||6.464%||6.584%||+0.5%|
|30 year fixed FHA|
|30 year fixed FHA||6.927%||7.645%||+0.11%|
|15 year fixed FHA|
|15 year fixed FHA||7.125%||7.401%||Unchanged|
|30 year fixed VA|
|30 year fixed VA||6.685%||6.92%||+0.13%|
|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.
Of course, there will be periods when mortgage rates fall between now and the new year. But I doubt they’ll last long. And I suspect those rates will remain not too far from their current levels for some months.
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
What’s keeping mortgage rates high? Nothing fundamental has changed recently. And it continues to be a combination of stubbornly high inflation and rate hikes by the Federal Reserve.
Yes, I know that mortgage rates aren’t directly determined by the Fed. But changes to its federal funds rate certainly influence the bond market that does largely set those rates.
Many had hoped that the Fed’s rate increases and the reduction of its huge stockpile of Treasury and mortgage bonds (aka “quantitative tightening”) would by now be bringing inflation down. But there are so far few signs that’s the case.
Yesterday, in a New York Times e-newsletter, economist Paul Krugman argued that Tuesday’s job openings and labor turnover survey (JOLTS) report had delivered good news. He suggested that it showed vacancies falling in August in a way that might mean we won’t need the high unemployment rate many thought would be necessary to tame inflation.
Rate hikes until next spring?
However, if that turns out to be the case, neither markets nor the Fed seems to have picked up on it yet.
And The Wall Street Journal (paywall) yesterday said: “Officials have indicated they are prepared to make a fourth increase of 0.75 point at their Nov. 1-2 meeting. ... At their Sept. 20-21 meeting, officials penciled in additional, cumulative rate increases of 1.25 percentage point this year. To achieve that, officials could lift their benchmark rate by 0.75 percentage point at their meeting next month and by 0.5 point at their gathering in December.”
In other words, the Fed will likely keep hiking its rates for the rest of 2022. And Reuters reported on Thursday, “Chicago Federal Reserve Bank President Charles Evans on Thursday said the U.S. central bank’s policy rate is likely headed to 4.5%-4.75% by the spring of 2023 as the Fed increases borrowing costs to bring down too-high inflation.”
So Fed rate hikes could be a continuing feature of the economic landscape at least through to spring 2023. And, personally, I doubt we’ll see sustained periods of significantly lower mortgage rates for as long as the Fed is hiking its federal funds rate.
Might a recession help?
Usually, mortgage rates fall during recessions. So might one of those come along and push those rates lower?
Well, it’s certainly possible. But part of the reason recessions act on mortgage rates that way is that the Fed normally intervenes by cutting the federal funds rate and sometimes buying Treasury and mortgage bonds. These measures stimulate the economy and shorten recessions.
However, the Fed has made it abundantly clear that this time it won’t be blown off course by a recession. It sees inflation as the bigger evil. And it seems determined to tackle that before turning its attention to addressing any future economic downturn.
Now, if a historically dreadful global recession turned up that threatened an economic meltdown, the Fed may find it impossible to maintain its hard line. But, short of something that world-changing, we might be stuck with high mortgage rates well into 2023.
Economic reports next week
Next week brings several inflation reports, all of which are capable of moving mortgage rates. Thursday’s consumer price index is likely to be the most influential. And Friday’s retail sales might also provide new information on how the economy’s holding up.
Wednesday brings the minutes of the last meeting of the Fed’s monetary policy body, the Federal Open Market Committee (FOMC). These sometimes bring new insights into the central bank’s thinking, and investors always pore over them.
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 — Markets closed for the Columbus Day holiday
- Tuesday — NY Fed 5-year inflation expectations for October
- Wednesday — September producer price index (final demand). Plus FOMC minutes
- Thursday — September consumer price index (CPI). Plus weekly new claims for unemployment insurance to Oct. 8
- Friday — September retail sales. Plus that month’s import price index and October’s consumer sentiment index
It’s a heavy week from next Wednesday onward.
Mortgage interest rates forecast for next week
Apologies, but I remain unable to provide a forecast for how mortgage rates will move next week. There’s simply too much volatility and unpredictability.
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.