Today’s mortgage and refinance rates
Average mortgage rates just edged higher yesterday. But they ended the week appreciably higher than they started it. And hopes that Wednesday’s Federal Reserve announcements would calm recent volatility have dwindled.
Although the Fed brought more certainty during the week, markets remain roiled. And mortgage rates might rise again next week. But, with so much up in the air, that prediction is far from certain.
Current mortgage and refinance rates
|Conventional 30 year fixed||5.688%||5.712%||+0.03%|
|Conventional 15 year fixed||4.908%||4.941%||+0.06%|
|Conventional 20 year fixed||5.701%||5.741%||+0.03%|
|Conventional 10 year fixed||4.669%||4.731%||-0.02%|
|30 year fixed FHA||5.547%||6.343%||+0.02%|
|15 year fixed FHA||5.069%||5.361%||-0.02%|
|30 year fixed VA||5.305%||5.522%||+0.02%|
|15 year fixed VA||4.75%||5.094%||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.|
Should you lock a mortgage rate today?
I’d lock my rate on the first morning when mortgage rates look likely to rise. Recently, that’s been most mornings.
Since mid-April, we’ve had a few false dawns when mortgage rates fell. But, overall, the scale and frequency of days on which rates rose have been much higher. In other words, it’s been a terrible few weeks (and months) for mortgage rates.
I keep saying that this can’t last forever, and hoping that the rate of increases will slow. But there’s little sign of that happening next week.
So, my 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 personal tolerance for risk help guide you.
What’s moving current mortgage rates
Mortgage rates might continue to rise for as long as inflation is spooking markets. Everyone was hoping those markets would be reassured by new counter-inflationary measures unveiled by the Federal Reserve on Wednesday. But, so far, that doesn’t seem to be the case.
There may be two main reasons for this:
- Whatever the Fed does, it’s going to take months for it to begin to rein in inflation
- There’s a chance the Fed’s measures won’t work
Most economists expect the Fed’s measures to work. But a minority wonder whether the pressure that’s pushing up prices has much to do with the issues the central bank is addressing.
We know that the current bout of inflation was started by global supply-chain bottlenecks, first created by COVID-19 lockdowns (which are still continuing in China) and now by Russia’s invasion of Ukraine. What if those remain the cause, and the Fed’s monetary policy has had little or nothing to do with it?
That’s not as off-the-wall as it may sound. After all, it was the Fed’s own belief through 2021.
And, were that analysis to prove correct, the Fed would be causing a world of pain for borrowers — and possibly a recession — while barely affecting inflation.
Never mind the theory
But that’s just theory. In practice, that world of pain has been hitting mortgage borrowers for months. And things may not get much easier for a while.
Yesterday, former Fed Vice Chair Richard Clarida told an audience at Stanford University that he expected the Fed’s main rate (the federal funds rate) to rise to 3.5% over the next 12 months, up from its current target range of 0.75% — 1.00%. (It was 0.25% — 0.50% before the Fed’s hike on Wednesday). And he thought it might have to rise to 4% later in 2023.
That’s at least a sevenfold increase — a huge jump over a year. And, although new, fixed-rate mortgage rates aren’t directly affected by the federal funds rate, they are certainly influenced by it.
Of course, Mr. Clarida might turn out to be wrong. And I remain optimistic that the pace at which mortgage rates have been rising will begin to slow sometime in the next few months. But, unfortunately, I doubt we’ll see sustained falls for some time.
Economic reports next week
This week’s economic reports have mostly been about employment. Next week’s focus is on inflation.
The most important of those is the consumer price index, out on Wednesday. But the producer price index (Thursday) and the import price index (Friday) could also be influential because they’re indicators of future inflation.
The potentially most important reports, below, are set in bold. The others are unlikely to move markets much unless they contain shockingly good or bad data.
- Monday — Consumer inflation expectations shown in first-quarter survey
- Tuesday — April small-business index from the National Federation of Independent Business
- Wednesday — Consumer price index for April.
- Thursday — April producer price index. Plus weekly new claims for unemployment insurance to May 7
- Friday — April’s import price index. Plus the May consumer sentiment index
Again, Wednesday’s the big day.
Mortgage interest rates forecast for next week
I suspect mortgage rates next week might rise. But that’s based on nothing more than my being unable to see any reason for the current, strong, upward trend to pause. So, don’t take these weekly predictions too seriously.
Mortgage and refinance rates usually move in tandem. And the scrapping of the adverse market refinance fee last year has largely eliminated a gap that had grown between the two.
Meanwhile, 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, 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 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.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.