Today’s mortgage and refinance rates
Average mortgage rates inched lower yesterday. But they’ve barely moved over the week as rises and falls continue to all but cancel each other out.
I can’t see a good reason to think that will change over the next seven days. So I’ll predict that mortgage rates next week may again barely change. Unless, of course, something unexpected emerges.
All this is good. Because these rates are stuck really close to the all-time low. And everyone has had time to lock at an uberlow rate.
Current mortgage and refinance rates
Conventional 30 year fixed
Conventional 15 year fixed
Conventional 20 year fixed
Conventional 10 year fixed
30 year fixed FHA
15 year fixed FHA
5/1 ARM FHA
30 year fixed VA
15 year fixed VA
5/1 ARM VA
COVID-19 mortgage updates: Mortgage lenders are changing rates and rules due to COVID-19. To see the latest on how coronavirus could impact your home loan, click here.
Should you lock a mortgage rate today?
According to Freddie Mac’s weekly archive, rates for 30-year fixed-rate mortgages have recently been effectively dormant. Since Aug. 5, they have ranged from a low of 2.86% to a high of 2.88%. Indeed, they’ve had a remarkably limited range since mid-April: from 2.93% to 3%. If they were human, they’d be on a heart monitor.
But they’re only sleeping. And the longer they do that, the higher the chances of a sharp movement when they wake up. Of course, they might then fall. But most economists are forecasting a rise.
So my personal recommendations remain:
LOCK if closing in 7 daysLOCK if closing in 15 daysLOCK if closing in 30 daysFLOAT if closing in 45 daysFLOAT 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 be guided by your gut and your personal tolerance for risk.
What’s moving current mortgage rates
What’s moving current mortgage rates? Not a lot.
But they’ll have to move sooner or later. And, right now, they look most likely to be set in motion by one or more of three obvious triggers.
1. COVID-19 Delta variant
The most recent wave in the coronavirus took many by surprise. And deaths increased by 29% during the 14 days leading up to Sept. 10, according to The New York Times (paywall). But there are signs things may be beginning to ease, with new cases reported during that period down 7%.
So far, that latest wave has had only a limited impact on the US economy. And, if that continues, this may be a weak influence on mortgage rates. But, if that changes — or a new, even more virulent variant emerges — that could push mortgage rates lower yet.
The Federal Reserve currently holds mortgage-backed securities (MBSs, the type of bond that largely determines mortgage rates) worth $2.4 trillion. And it’s continuing to buy those at a rate of $45 billion a month. That’s distorting the market and keeping mortgage rates artificially low.
The Fed’s already signaled that it plans to slow these purchases this year and to stop them next. And, when it does that, mortgage rates are likely to rise, perhaps significantly.
It just might announce its plans at its next scheduled news conference on Sept. 22. Certainly, some influential voices within the Fed are still urging that, in spite of a disappointing employment situation report last week. But, if cooler opinions prevail, an announcement will likely come at one of two events, scheduled for early November or mid-December.
3. Debt ceiling
Earlier this week, Treasury Secretary Janet Yellen wrote to Congress warning that the government would run out of money next month if legislators fail to raise the debt ceiling. As far as I know, the US is the only advanced nation to have a debt ceiling. Because this doesn’t enable new spending. All it does is provide the money for the government to fulfill commitments Congress has already authorized.
The last time Congress took the ceiling to the brink was in 2021. And, as a result, interest rates rose and the country’s credit rating was reduced. It’s never actually failed to raise it because doing so would result in “financial Armageddon,” in the words this week of Moody’s Analytics Chief Economist Mark Zandi.
It’s very likely that Congress will raise the ceiling this time as well. Because failure would see the US government defaulting on its debts and obligations, which is unthinkable. But we have to hope that legislators aren’t tempted to play political games with it to the point that damages the economy.
Economic reports next week
There are some important economic reports this week. Those include three that measure inflation, which is an obsession with investors at the moment. We’ll also discover retail sales in August on Thursday.
Normally, markets are sensitive to such key reports. But for many months now, they’ve shrugged off most of them. So it may be that this week’s will barely affect mortgage rates, too.
None of the other economic reports listed below is likely to cause much movement in markets unless it includes shockingly good or bad data:
Tuesday — August consumer price index (CPI) and core CPI (CPI with volatile food and energy prices stripped out)Wednesday — Import price index, industrial production and capacity utilization, all for AugustThursday — August retail sales. Plus weekly new claims for unemployment insurance to Sept. 11. Friday — First September reading of the consumer sentiment index
Tuesday and Thursday are the big days next week.
Mortgage interest rates forecast for next week
No need to change my prediction from last week: “I reckon that mortgage rates next week will be unchanged or barely changed. That’s not a guarantee. But it does seem the most likely scenario.”
Mortgage and refinance rates usually move in tandem. And a gap that had grown between the two has been largely eliminated by the recent scrapping of the adverse market refinance fee.
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 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 lenderBoosting your credit score — Even a small bump can make a big difference to your rate and paymentsSaving the biggest down payment you can — Lenders like you to have real skin in this gameKeeping your other borrowing modest — The lower your other monthly commitments, the bigger the mortgage you can affordChoosing your mortgage carefully — Are you better off with a conventional, FHA, VA, USDA, jumbo or another loan?
Time spent getting these ducks in a row can see you winning lower rates.
Remember, it’s 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) you’ll be quoted. 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.