Today’s mortgage and refinance rates
Average mortgage rates moved moderately lower yesterday. I’d predicted they’d go higher. And you can find out why I got that wrong by reading on. Of course, those rates remain fairly high by 2020-21 standards. But they’re exceedingly low by all others.
And there may be more good news. Because mortgage rates today look likely to fall again. However, markets are volatile so that could change as the day progresses.
Current mortgage and refinance rates
|Conventional 30 year fixed||3.196%||3.215%||-0.02%|
|Conventional 15 year fixed||2.592%||2.623%||-0.03%|
|Conventional 20 year fixed||2.968%||3.001%||-0.05%|
|Conventional 10 year fixed||2.507%||2.571%||-0.02%|
|30 year fixed FHA||3.22%||3.981%||+0.01%|
|15 year fixed FHA||2.559%||3.203%||-0.01%|
|5/1 ARM FHA||2.628%||3.199%||-0.01%|
|30 year fixed VA||3.062%||3.255%||-0.06%|
|15 year fixed VA||2.801%||3.151%||Unchanged|
|5/1 ARM VA||2.565%||2.396%||-0.03%|
|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?
We’ve seen more falls in mortgage rates than rises over the last week. But I doubt they’re heralding a reversal in the recent upward trend. And I suspect we’ll look back on them as a blip rather than something new.
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
>Related: 7 Tips to get the best refinance rate
Market data affecting today’s mortgage rates
Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:
- The yield on 10-year Treasury notes fell to 1.56% from 1.60%. (Good for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields
- Major stock indexes were mixed soon after opening. (Neutral for mortgage rates.) When investors are buying shares they’re often selling bonds, which pushes prices of those down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
- Oil prices dropped to $83.39 from $84.77 a barrel. (Good for mortgage rates*.) Energy prices play a large role in creating inflation and also point to future economic activity.
- Gold prices inched up to $1,794 from $1,790 an ounce. (Neutral for mortgage rates*.) In general, it is better for rates when gold rises, and worse when gold falls. Gold tends to rise when investors worry about the economy. And worried investors tend to push rates lower
- CNN Business Fear & Greed index — held steady at 78 out of 100. (Neutral for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are better than higher ones
*A change of less than $20 on gold prices or 40 cents on oil ones is a fraction of 1%. So we only count meaningful differences as good or bad for mortgage rates.
Caveats about markets and rates
Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.
So use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today might fall. But be aware that “intraday swings” (when rates change direction during the day) are a common feature right now.
Important notes on today’s mortgage rates
Here are some things you need to know:
- Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care
- Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
- Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the wider trend over time
- When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
- Refinance rates are typically close to those for purchases. And a recent regulatory change has narrowed a gap that previously existed
So there’s a lot going on here. And nobody can claim to know with certainty what’s going to happen to mortgage rates in coming hours, days, weeks or months.
Are mortgage and refinance rates rising or falling?
Why was my prediction from yesterday wrong? Well, part of it may have been a hangover from last Friday, when the day started badly for those rates but improved as the hours passed. But the improvement came too late for lenders to change their rate cards. And the benefit was carried over the weekend. Meanwhile, yesterday also brought lower rates after a poor start.
Unfortunately, these things happen with markets. Indeed, they’re a feature, not a bug.
And they seem to be especially vulnerable to such swings at the moment. Indeed, Bank of America has suggested the “gap between equities and fixed income [bond] volatility measures widens at the fastest pace in a decade,” according to this morning’s Financial Times. And it refers to “US bond tumult.”
Mortgage rates are, of course, largely determined by trading in a type of bond: the “mortgage-backed security” (MBS). So the message seems to be: “Hold onto your hats!”
Today and soon
Some of this volatility may be down to an announcement that pretty much everyone believes the Federal Reserve will make early tomorrow afternoon (ET). It’s expected to say that it will gradually reduce the amount it currently spends each month buying certain bonds: $40 billion on MBSs and $80 billion on US Treasury bonds.
Many think the Fed will begin to slow those purchases within a couple of weeks and finish “tapering” them (get to zero) by the middle of 2022. And that’s likely to keep mortgage rates high. Because that expenditure has been keeping them artificially low for the last 19 months.
Recent rises in those mortgage rates have largely been down to investors positioning themselves in anticipation of the Fed’s move.
So we may not see the sharp spike tomorrow that I once thought likely. But it still may be an interesting day for mortgage rates.
Other pressures on mortgage rates
The Fed’s announcement isn’t the only force exerting upward pressure on these rates. Others include:
- Inflation — Investors buy a fixed income when they purchase any bond, including an MBS. But inflation is currently high. Higher, indeed, than the income a bond will yield
- Falling COVID-19 infection rates — The number of new US infections yesterday was 74,504, according to The New York Times. On Sept. 13, it was 285,058. This retreat of the coronavirus bodes well for our economy.
Both those (and the Fed) are acting to push mortgage rates higher. But there are some trying to drag them lower:
- Global and domestic supply chain issues that are holding back both productivity and consumer spending
- COVID-19 — The fall in new infections is beginning to plateau. And some virus experts fear a new winter wave, which could further slow — or even undermine — the economic recovery.
For now, the forces pushing rates higher look much stronger to me than the ones dragging them lower. So I’m still expecting mortgage rates to continue to rise, though the trend is bound to be punctuated by periods of falls.
But, as always, that prediction could change if the circumstances do.
For more background, read last Saturday’s weekend edition of these daily reports.
Over much of 2020, the overall trend for mortgage rates was clearly downward. And a new, weekly all-time low was set on 16 occasions last year, according to Freddie Mac.
The most recent weekly record low occurred on Jan. 7, when it stood at 2.65% for 30-year fixed-rate mortgages.
Since then, the picture has been mixed with extended periods of rises and falls. Unfortunately, since September, the rises have grown more pronounced.
Freddie’s Oct. 28 report puts that weekly average for 30-year, fixed-rate mortgages at 3.14% (with 0.7 fees and points), up from the previous week’s 3.09%.
Expert mortgage rate forecasts
Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.
And here are their current rate forecasts for the remaining, current quarter of 2021 (Q4/21) and the first three quarters of 2022 (Q1/22, Q2/22 and Q3/22).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s and Freddie’s were published on Oct. 15 and the MBA’s on Oct. 18.
However, given so many unknowables, the whole current crop of forecasts may be even more speculative than usual.
All these forecasts expect at least modestly higher mortgage rates fairly soon.
Find your lowest rate today
Some lenders have been spooked by the pandemic. And they’re restricting their offerings to just the most vanilla-flavored mortgages and refinances.
But others remain brave. And you can still probably find the cash-out refinance, investment mortgage or jumbo loan you want. You just have to shop around more widely.
But, of course, you should be comparison shopping widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:
Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan.
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 end result is a good snapshot of daily rates and how they change over time.