Today’s mortgage and refinance rates
Average mortgage rates fell yesterday. And after an upward trend that began in January, there have only been two modest increases in April.
But is this period of fall lasting? Many doubt it. In the Wall Street Journal on Friday, Michael S. Derby suggested, “It can’t last.” The problem is, nobody knows when it might end. So I have to predict that again Mortgage rates next week are unpredictable.
We are sorry! The last three weeks have been the only time I’ve had no idea what to expect – and that’s why I’ve been forced to be so vague. Read on for my reasons.
Current mortgage and refinancing rates
|program||Mortgage rates||APR *||change|
|Conventional set for 30 years||2.983%.||2,988%.||Unchanged|
|Conventional 15 years fixed||2.156%.||2,273%.||+ 0.03%|
|Conventional set for 20 years||2.75%.||2,842%.||+ 0.03%|
|Conventional 10 years fixed||1.906%.||2.092%.||+ 0.03%|
|Fixed FTA for 30 years||2,733%.||3.39%.||-0.01%|
|Fixed FTA for 15 years||2,379%.||2.963%.||-0.1%|
|5 years ARM FHA||2.5%.||3,207%.||Unchanged|
|30 years permanent VA||2,375%.||2.547%.||Unchanged|
|15 years fixed VA||2.25%.||2.571%.||Unchanged|
|5 years ARM VA||2.5%.||2,386%.||Unchanged|
|Prices are provided by our partner network and may not reflect the market. Your rate could be different. Click here for a personalized price offer. See our tariff assumptions Here.|
COVID-19 Mortgage Updates: Mortgage lenders are changing interest rates and rules due to COVID-19. For the latest information on how coronavirus can affect your home loan, Click here.
Should You Lock A Mortgage Rate Today?
All of my tariff lock recommendations (below) are set to lock. And that’s because I’m pretty sure that mortgage rates will go up again soon. Unfortunately, nobody has a good idea when. Read the next section to learn how current mortgage rates are moving.
But just because I recommend locking your rate doesn’t mean you should do it as long as rates keep falling. What you can do is wait for it to start rising again, which can be next week, next month, or possibly even later.
If you do, the best thing to do is to check with your lender to see if you can lock up almost immediately when you hit the button. And watch how mortgage rates move on a daily basis. Because in due time they could get up quickly.
Still, my general recommendations remain:
- LOCK when you approach 7th Days
- LOCK when you approach fifteen Days
- LOCK when you approach 30th Days
- LOCK when you approach 45 Days
- LOCK when you approach 60 Days
With so much uncertainty right now, however, your instincts could easily prove to be as good as mine – or better. So let your gut and your personal risk tolerance guide you.
What is driving current mortgage rates?
The current decline in mortgage rates is all about investor sentiment. On April 21, the Wall Street Journal reported:
Many investors remain optimistic about the outlook … but are increasingly concerned that a surge in coronavirus cases around the world could delay plans to reopen business.
And therein lies the problem. The domestic economy is extremely buoyant and the economic reports suggest that the rest of this year will be very positive. In fact, the Federal Reserve is forecasting the fastest growth in 2021 since Ronald Reagan was in the Oval Office.
All of these are drivers that would normally drive mortgage rates much higher pretty quickly. But that didn’t happen in April, in part (mostly now) due to fears that COVID-19 could wreak havoc overseas. After all, the US is still a trading nation and needs foreign partners to keep its economy healthy.
I still think it is likely that investors will soon be forced to recognize the boom in the domestic economy and overcome their foreign fears. Even some relatively poor countries are rapidly increasing their vaccination programs. And there is hope that the pandemic will be defeated globally in 2022.
If I’m right, mortgage rates should resume their uptrend soon – maybe sharply. But if I’m wrong, they could drift further down. And if a new vaccine-resistant variant of the virus shows up, they could fall.
How do you see the odds for each of these scenarios?
Economic reports next week
It’s almost not worth telling you about the economic reports on next week’s calendar. Recently, the markets have either ignored them or, in fact, acted contrary to normal.
Even so, I’ll list them for consistency. Remember how difficult it is now to interpret its impact on mortgage rates.
Here are next week’s key economic reports:
- Monday – March durable goods orders
- Tuesday – Case Shiller House Price Index for February. Plus April’s consumer confidence index
- Wednesday Federal Reserve Press Conference (see below)
- Thursday – First reading of gross domestic product (GDP) for the first quarter of 2021. Plus new unemployment insurance claims every week.
- Friday – Personal Income, Consumer Spending, and Core Inflation for March. Plus April’s final consumer sentiment index
The Fed’s main political body, the Federal Open Market Committee (FOMC), meets on Tuesday and Wednesday. Key documents and projections will be released on Wednesday at 2:00 p.m. ET. A press conference will follow at 2:30 p.m. (ET). The markets are taking these very seriously, and they could be the biggest change in mortgage rates next week.
Typically, the markets react to unexpectedly good news with higher mortgage rates. You usually see lower rates when the numbers are bad. However, this has not necessarily been the case lately. And it takes a lot to get them far.
Mortgage rates forecast for next week
For a third week I have to say that Mortgage rates are essentially unpredictable right now. I hope my earlier explanations of what is going on earn me your forgiveness.
Mortgage and refinance rates usually move together. Note, however, that refinancing rates are currently slightly higher than those for purchase mortgages. This gap is likely to stay pretty constant as they change.
Meanwhile, a recent change in regulations has made most investment property and vacation home mortgages more expensive.
How is your mortgage rate determined?
Mortgage and refinancing rates are generally determined by the prices on a secondary market (similar to stock or bond markets) where mortgage-backed securities are traded.
And that depends a lot on the economy. Therefore, mortgage rates are typically high when things are going well and low when the economy is in trouble.
However, they play a huge role in determining your own mortgage rate in five ways. You can significantly affect it by:
- Shopping for Your Best Mortgage Rate – They vary widely from lender to lender
- Boost Your Credit Score – Even a small bump can make a big difference to your rate and payments
- Save the biggest down payment you can – lenders like you have real skin in this game
- Keep Your Other Loans Modest – The lower your other monthly obligations, the larger the mortgage you can afford
- Carefully Choosing Your Mortgage – Are You Better Off With a Conventional, FHA, VA, USDA, Jumbo, or Any Other Loan?
If you spend these ducks in a row you can win lower rates.
Remember, it’s not just a mortgage rate
Be sure to consider all of your upcoming home ownership costs when figuring out what a mortgage you can afford. So concentrate on your “PITI” P.rincipal (pays out the borrowed amount), Interest (the price of borrowing), (property) T.Axes and (homeowners) IInsurance. Our Mortgage calculator can help with that.
Depending on your type of mortgage and the amount of your down payment, you may also need to purchase mortgage insurance. And that can easily reach three digits every month.
But there are other potential costs. So you have to pay homeowners association membership fees if you choose to live with an HOA anywhere. And wherever you live, you should expect repair and maintenance costs. There is no landlord who calls when something goes wrong!
After all, you have a hard time forgetting about closing costs. You can see this in the Annual Percentage (APR) you provide. Because that effectively spreads them out over the life of your loan and makes them higher than your direct mortgage rate.
However, you may be able to get help with these closing costs and Your deposit, especially if you are a first time buyer. Read:
Mortgage rate method
The mortgage reports get interest rates based on selected criteria from multiple credit partners every day. We’ll find an average rate and an annual interest rate for each type of loan that we want to show on our chart. Since we calculate a series of average prices, this will give you a better idea of what you might find in the market. We also calculate average interest rates for the same types of loans. For example, FHA was fixed with FHA. The end result is a good snapshot of the daily rates and how they change over time.