Mortgage and refinance rates today, Dec. 10, and rate forecast for next week

Today’s mortgage and refinance rates

Average mortgage rates were just a touch higher yesterday evening than they were seven days earlier. But, really, this week has been about those rates gently drifting up and down.

Next week may be very different. Tuesday brings a blockbuster inflation report. And that’s followed by a crucial Federal Reserve report on Wednesday. No wonder Mortgage News Daily’s headline last night was “Extremely Risky Week Coming Up For Better or Worse.” Unfortunately, nobody yet knows whether it will be for better or worse. We’ll have to wait to see what those publications say, but I’m pessimistic.

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.

It’s possible that mortgage rates will climb sharply next week. But they might hold steady or even dip. And nobody can be sure which way they’ll go. Me? I’m both pessimistic and cautious.

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

Why do I think mortgage rates are more likely to rise than fall next week? After all, nobody can be sure.

Inflation

Well, the first hurdle is Tuesday’s consumer price index (CPI) report for November. Will it confirm October’s figures, which suggested price rises were slowing? If it does, mortgage rates might fall. But if it shows them standing still or increasing those rates might rise.

I reckon there’s a good chance that the CPI will be good enough to keep those rates within their current range. But I’m far from confident. Yesterday’s producer price index was disappointing. That reflects prices early in the supply chain and suggests future inflation rates. And it showed those prices holding steady in November compared with October, confounding forecasts that they’d fall a little.

So, the CPI really could go either way.

The Federal Reserve

I’m much more worried about what next Wednesday’s Fed report and news conference will say. Because that has huge potential to move mortgage rates, perhaps pushing them back up close to 7%.

And it’s about the Fed that I’m most pessimistic. The big falls in mortgage rates we saw on Nov. 10 and Dec. 1 were driven by a hope that the good inflation reports on those days would persuade the Fed to slow or pause its interest rate hikes early in 2023. Investors were even talking about an early “pivot,” referring to when the Fed changes course 180º and begins cutting rates.

I see absolutely no grounds for any of this optimism. The Fed itself has made crystal clear that it would need several months of good inflation reports before it considers pausing its rate hikes. And that it will be looking for signs that economic growth is slowing before doing so.

Meanwhile, next Tuesday’s CPI report will cover only the second month to show slowing price rises — assuming it does. And the most recent key economic indicators (employment and gross domestic product) show the economy remaining in remarkably good shape.

Fed Chair Jerome Powell has another concern: rising wages. As he said last week, the labor market so far “shows only tentative signs of rebalancing, and wage growth remains well above levels that would be consistent with 2% inflation over time.”

Fed and mortgage rates

You can see why I fear that Wednesday could be a bad day for mortgage rates. Investors have a history of irrational hope over interest-rate policy only to be slapped down by the Fed. And that’s unlikely to be pretty for homebuyers.

Of course, I don’t have a crystal ball. But I believe a humiliating and screeching U-turn on the part of the Fed is highly unlikely.

It remains possible that markets will shrug off what’s said on Wednesday. But I wouldn’t bank on it.

Rate hike and retail sales

Wednesday is pretty much bound to bring another Fed rate hike. Assuming that’s a 50-basis-point (0.5%) one, it shouldn’t affect mortgage rates much. Everyone’s expecting that and it was priced into those rates weeks ago.

There’s an outside chance of a fifth 0.75% increase. CME’s FedWatch tool puts the chances of that at 21.8%, which is high enough not to discount the possibility. If that larger hike does materialize, it could push mortgage rates higher.

Retail sales data for November are due out next Thursday. They may be swamped by the CPI and Fed reports. However, if they show consumer demand holding up and they arrive while there’s already upward momentum on mortgage rates, they could fuel further rises.

Economic reports next week

I’ve covered the most important economic reports due next week above. But there are others.

The ones with the most potential impact are shown below in bold. The others could still move mortgage rates. But probably only if they reveal shockingly good or bad data.

• Monday — New York Fed inflation expectations over 1 and 5 years
• Tuesday — November consumer price index. Plus the small business index from the National Federation of Independent Business (NFIB)
• Wednesday — Federal Reserve rate announcement, report and news conference
• Thursday — November retail sales. And November industrial production and capacity utilization. Plus initial jobless claims for the week ending Dec. 10
• Friday — December purchasing manager indexes (PMIs) for the manufacturing and services sectors from S&P

This might turn out to be a pivotal week for mortgage rates. Watch out for Tuesday and Wednesday.

Mortgage interest rates forecast for next week

I fear that mortgage rates might rise next week. But everything depends on what happens on Tuesday and Wednesday, so I’m far from certain.

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.

Your part

But you play a big part in determining your own mortgage rate in five ways. And you can affect it significantly by:

1. Shopping around for your best mortgage rate — They vary widely from lender to lender
2. Boosting your credit score — Even a small bump can make a big difference to your rate and payments
3. Saving the biggest down payment you can — Lenders like you to have real skin in this game
4. Keeping your other borrowing modest — The lower your other monthly commitments, the bigger the mortgage you can afford
5. 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.