Mortgage rates today, Aug. 19, and rate forecast for next week

Today’s mortgage rates

Average mortgage rates effectively held steady yesterday. But that was the only day this week on which they didn’t climb. So, they’ve risen over the last seven days.

The more out-of-whack these rates get, the more difficult they are to predict. So, I’m struggling here. But I guess there’s a slightly higher chance of mortgage rates rising than falling next week, simply because that’s the way the momentum has been heading so far this month.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Read on for possible reasons why the market that largely determines mortgage rates has been acting the way it has. Eventually, investors will feel better about key issues, and those rates will then fall.

But, even then, I doubt they’ll tumble far or for long.

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 the recent rises in mortgage rates? Earlier this week, I suggested many investors are spooked.

What keeps investors awake at night?

So what’s bothering them? Here are some of the unsettling prospects they’re facing:

1. Warren Buffett’s Berkshire Hathaway has recently been selling many more shares than it’s been buying. And Michael Burry, who correctly forecasted the 2008 housing collapse (his character was in the “Big Short” movie), has wagered $1.6 billion on stock prices falling hard soon. When people with such glowing records for anticipating trouble begin putting their money where their mouths are, investors worry
2. China is the world’s second-biggest economy and at times has almost single-handedly driven growth in the global economy. The latest economic figures out of Beijing show worrying signs of a significant slowdown that could infect the rest of the world
3. The Federal Reserve is unlikely to begin to cut general interest rates as early as investors were hoping. The Fed’s been saying this for ages. But it’s only recently markets have begun to believe it
4. Russia’s invasion of Ukraine continues to keep food and energy prices high. And it may push them higher when winter arrives. Meanwhile, many are worried that a desperate regime in Moscow could escalate the war to the point where it uses nuclear weapons
5. A possible banking crisis loomed and quickly receded earlier this year. But worries about the banking sector haven’t gone away. Fitch Ratings recently downgraded some smaller banks’ creditworthiness. And it warned that some bigger banks could be in line for downgrades, too
6. Just as most of us had pretty much forgotten Covid, a new variant has emerged. BA.2.86 (aka Pirola) derives from the Omicron variant and, although highly mutated, doesn’t yet look to pose a high threat. But scientists are still struggling to understand it. And it’s certainly spreading

Wow!

Maybe it’s the mood, not the data

Are some or all of these bullet points behind recent falls in stock indexes and rises in bond yields? (Rising bond yields push mortgage rates higher.) It seems likely.

And it could explain why mortgage rates have been rising in August almost regardless of the data in economic reports. It’s not that things are already bad. It’s that there’s a large number of risk factors concerning the future.

Who cares what happened in July to retail sales or employment or even the consumer price index when you’re worried things could be much worse within months?

By the way, for stock indexes to fall and bond yields to rise at the same time, investors would have to be selling both. And that’s unusual.

Normally, when investors are spooked, they sell stocks and buy safer bonds. And that pushes bond yields (and mortgage rates) lower.

But we’re not seeing that now. I can only imagine that investors are retreating into cash.

Next week

Does that mean there’s no point in our worrying about economic reports? To some extent.

Certainly, the ones scheduled for next week rarely move mortgage rates far at the best of times. So, distracted investors may pay little attention to them.

The exception might be two early readings of purchasing managers’ indexes (PMIs) for August from S&P Global. There’s one for the services sector and another for the manufacturing sector next Wednesday.

These will reveal how those sectors are doing, which is interesting. But will they be enough to improve or worsen investors’ moods? I doubt it.

More likely to affect those moods are things Fed officials say at the annual Jackson Hole Economic Symposium, which starts next Thursday, Aug. 24. And various of those officials will give interviews that day. Fed Chair Jerome Powell will give the opening remarks the following morning, and his words are always especially influential.

Economic reports next week

So, I’m not expecting fireworks from next week’s economic reports. But it wouldn’t be the first time I’d gotten something wrong.

In the following list of next week’s reports, only those in bold are likely to affect mortgage rates much. The others probably won’t have much impact unless they contain shockingly good or bad data.

• Tuesday — July existing home sales
• Wednesday — August PMIs from S&P. Plus July’s new home sales
• Thursday — Fed officials' interviews from Jackon Hole. And July durable goods orders. Plus new jobless claims for the week ending Aug. 19
• Friday — Fed Chair Jerome Powell's Jackson Hole speech

Jackson Hole may be more influential than any economic report next week.

Time to make a move? Let us find the right mortgage for you

Mortgage interest rates forecast for next week

Yet again, I’m predicting that mortgage rates might rise moderately or modestly next week. Let’s hope I’m wrong, and that something will emerge that lightens investors’ moods.

But these weekly forecasts are the least reliable I make. So, always take them with a pinch of salt.

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 rate 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 2023

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.