Today’s mortgage and refinance rates
Average mortgage rates rose appreciably yesterday. That was unexpected. So read on to discover what happened.
Next week brings a potentially pivotal event for mortgage rates. But nobody can be sure how that will turn out. So I’ll say that mortgage rates next week are unpredictable. Sorry for the (rare) cop-out. But even educated guesses are irresponsible in the current circumstances.
Current mortgage and refinance rates
|Conventional 30 year fixed||3.048%||3.063%||+0.04%|
|Conventional 15 year fixed||2.39%||2.415%||+0.03%|
|Conventional 20 year fixed||2.898%||2.931%||+0.06%|
|Conventional 10 year fixed||2.319%||2.376%||+0.05%|
|30 year fixed FHA||2.993%||3.75%||+0.01%|
|15 year fixed FHA||2.439%||3.082%||+0.05%|
|5/1 ARM FHA||2.16%||2.971%||Unchanged|
|30 year fixed VA||2.846%||3.036%||+0.03%|
|15 year fixed VA||2.653%||3.002%||+0.04%|
|5/1 ARM VA||2.421%||2.272%||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.|
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?
I’d lock my mortgage rate if I were you. But watch out for temporarily lower rates, which just might arrive next Monday morning.
Next Wednesday’s big event (see below for details) could go either way. And it’s possible these rates will fall on Wednesday or after. But it’s also possible that they’ll rise significantly.
If I had to bet, I’d put a few bucks on their falling. But we’re talking about your next mortgage rate here. And those stakes would be too high for me. Of course, you may be a braver gambler than I am. And only you can decide on the level of risk with which you’re comfortable.
I’m today changing my personal recommendations to reflect next week’s risk. But I may change them back on Thursday if things work out well for rates:
- 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 be guided by your gut and your personal tolerance for risk.
What’s moving current mortgage rates
Average rates for 30-year, fixed-rate mortgages jumped 7 basis points (a basis point is one-hundredth of 1%) yesterday and 3 basis points on Thursday, according to Mortgage News Daily’s (MND’s) data. And that saw those rates jump from 2.93% on Wednesday evening to 3.03% yesterday evening.
Now, in normal times, 10 basis points over two business days wouldn’t count as a shockingly large rise. But we’ve grown used to dormant mortgage rates in recent months. And it certainly shocked me. So we’ll discuss what caused it next.
Reason for the rise: Next week’s big event
The market commentaries that I’ve read suggest that those rises are a result of investors positioning themselves ahead of next Wednesday’s (Sept. 22) Federal Reserve news conference. I’ve been flagging up that date as a risk to mortgage rates for several weeks.
Because it’s possible that the Fed will announce at its news conference that day that it’s slowing and later stopping (“tapering”) some of its easy-money policies, which include keeping mortgage rates artificially low. And the last time it made such an announcement concerning a similar program, back in 2013, mortgage rates shot higher.
And yet I reckon that the announcement is more likely to be made on November 3 or December 15, which are the dates of the two remaining scheduled Fed news conferences this year.
Why? Because, in spite of loud voices within the Fed advocating an early date for tapering, cooler heads have so far prevailed. And I don’t yet see enough economic evidence of better employment figures or lower inflation rates for the hotheads to sway the majority.
And yet …
Of course, everyone (including me) assumes that the sorts of big-hitting investors who can move markets are much cleverer than I am. And Thursday’s and yesterday’s mortgage rate rises suggest they think the Fed might act next Wednesday. Maybe they have some inside information — or, more likely, are hearing some rumors.
Either way, today’s rates are the current reality. And we’ll know on Wednesday whether or not they’re justified.
Some good news
There’s a glimmer of hope for mortgage rates next Monday. Because those often shadow yields on 10-year Treasury notes.
And those yields acted differently yesterday from mortgage rates. They spiked early in the day, rising to 1.39% from an opening of 1.34%. But then they fell back, closing at 1.36%. And that’s only a moderate rise.
So it’s possible that mortgage rates will fall back, too, on Monday morning as lenders adjust their rates to reflect changes later on Friday.
Economic reports next week
Next Wednesday’s Fed statement at 2 p.m. (ET) and news conference 30 minutes later are likely to dominate next week. For mortgage rates, it could change everything (less likely) or nothing (more likely).
None of the economic reports listed below is likely to cause much movement in markets unless it includes shockingly good or bad data:
- Tuesday — August building permits and housing starts
- Wednesday — Fed events plus existing home sales for August
- Thursday — August leading economic indicators. Plus weekly new claims for unemployment insurance to Sept. 18
- Friday — New home sales for August
Wednesday’s the day to watch.
Mortgage interest rates forecast for next week
So much depends on next Wednesday’s Fed news conference that I can’t make a worthwhile prediction for mortgage rates next week.
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.
And another regulatory change, announced this week, has likely made mortgages for investment properties and vacation homes more accessible and less costly.
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 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, 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.