Today’s mortgage and refinance rates
Average mortgage rates held steady yesterday. Yes, they’re now high by 2020-21 standards. But look back any further and they remain ridiculously low.
I shouldn’t be surprised if mortgage rates increase next week. But that’s what I thought seven days ago. And they actually fell, though only a little. If anything, next week is even more unpredictable. Read on to discover why.
Current mortgage and refinance rates
|Conventional 30 year fixed||3.22%||3.239%||-0.03%|
|Conventional 15 year fixed||2.6%||2.631%||-0.06%|
|Conventional 20 year fixed||2.989%||3.022%||-0.06%|
|Conventional 10 year fixed||2.514%||2.57%||-0.03%|
|30 year fixed FHA||3.209%||3.97%||-0.06%|
|15 year fixed FHA||2.566%||3.21%||-0.04%|
|5/1 ARM FHA||2.65%||3.201%||-0.07%|
|30 year fixed VA||3.118%||3.311%||-0.03%|
|15 year fixed VA||2.774%||3.124%||-0.05%|
|5/1 ARM VA||2.612%||2.421%||-0.04%|
|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?
I’d lock my mortgage rate if I were you. Because, in my view, the forces that are trying to push those rates higher remain powerful. And the ones that want to drag them lower are relatively weak. Read on for details.
Of course, that could change. But it would likely take something catastrophic to cause a quick and fundamental turnaround. And that’s not currently looking likely.
Anyway, my personal 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 be guided by your gut and your personal tolerance for risk.
What’s moving current mortgage rates
The big event for mortgage rates next week may turn out to be the Federal Reserve’s much-anticipated announcement on Wednesday, Nov. 3, that it will begin to “taper its quantitative easing programs.” To do what?
That just means that it’s going to start to wind down some programs, including one that’s been keeping mortgage rates artificially low since the pandemic began to bite.
For some months, I thought this might send mortgage rates shooting higher. Because that’s what happened the last time the Fed tapered a similar program, in 2013. But now I’m expecting that Wednesday announcement to be a bit of a damp squib.
Yes, there might be some market reaction either side of Wednesday’s Fed statement (2 p.m. (ET)) and news conference 30 minutes later. But, this time around (and unlike in 2013), the central bank has clearly signaled its intentions well in advance.
And recent rises in mortgage rates have likely been in anticipation of the announcement. So the pain’s been spread and the worst of it may be behind us already.
Of course, there’s always an outside chance of the Fed delaying its announcement, perhaps until its next meeting in mid-December. But it’s so clearly signaled its intention of doing so on Nov. 3 that any delay would fall somewhere between mischievous and perverse.
The Fed alone won’t stop mortgage rates rising
As I said, the Fed’s announcement may have only a limited effect on mortgage rates. But two other forces remain potent.
The first is inflation. That continues to be warm, long after many expected it to have cooled. And there are no signs yet of that changing anytime soon.
When investors purchase mortgage bonds (“mortgage-backed securities,” which largely determine mortgage rates), they’re buying a fixed income. And, right now, inflation is higher than that income. So a real-terms loss is built in. You can’t blame them for wanting higher yields — which means higher mortgage rates.
The second driver of higher mortgage rates is falling new infection rates for COVID-19. Low mortgage rates over the last 19 months have pretty much entirely — though sometimes indirectly — been down to the pandemic. So you can see why a weakening coronavirus could translate into higher rates.
But note that in the last few days the infection rate has inched higher. And some fear a new wave over the winter. If that materializes, it should take some pressure off mortgage rates. But at a dreadful cost.
Economic reports next week
It’s a big week for economic reports. And the biggest of all is next Friday’s employment situation report. Analysts hope it will be better than last month. But we’ll have to wait to see. Some perceive ADP’s Wednesday employment report as a bellwether for the official one. So, that, too, could cause waves.
There are also a couple of indexes for the manufacturing and services sector from the Institute for Supply Management (ISM) on Monday and Wednesday respectively. And investors take those seriously as indicators of how the economy’s set to perform.
But none of the other economic reports listed below is likely to cause much movement in markets unless it includes shockingly good or bad data:
- Monday — October ISM manufacturing index and September construction spending
- Wednesday — Fed statement and news conference (see above). Plus ADP employment report and ISM services index, both for October
- Thursday — Productivity and unit labor costs for the third quarter. Plus weekly new claims for unemployment insurance to Oct. 30
- Friday — October employment situation report, comprising nonfarm payrolls, unemployment rate and average hourly earnings
Watch out for Wednesday and Friday.
Mortgage interest rates forecast for next week
Once again, I think that mortgage rates might rise next week. Yes, I was wrong last week when I predicted the same thing. However, in my defense, I did say: “But we’re likely due a small fall as an adjustment sometime soon. And it’s always possible that could occur over the next seven days.”
I’m similarly unsure about how those rates will move next week. But I still expect them to rise overall over the coming weeks and months.
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 recent regulatory change 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.