Today’s mortgage and refinancing rates
Average mortgage rates fell yesterday. But the ups and downs of the week canceled each other out. And the Friday night average rate was exactly the same as the previous Friday night based on Mortgage News Daily numbers.
and Mortgage rates next week very little can change either. Yes, there will be the usual ups and downs. But prices have nowhere to go. Of course, there is always the possibility that an unforeseen event will occur that will disturb this calm and move these prices decisively.
Current mortgage and refinancing rates
|program||Mortgage rates||Effective interest rate*||Change|
|Conventional 30 years||2,808%||2,808%||-0.01%|
|Conventionally fixed for 15 years||1.995%||1.996%||-0.12%|
|Conventional 20 years old||2,391%||2,391%||-0.1%|
|Conventionally fixed for 10 years||1,875%||1.922%||-0.04%|
|30 years permanent FHA||2,688%||3,343%||Unchanged|
|Fixed FTA for 15 years||2,431%||3,032%||-0.01%|
|5/1 ARM FHA||2.5%||3,201%||Unchanged|
|30 years of permanent VA||2.25%||2,421%||-0.07%|
|15 years fixed VA||2.25%||2,571%||Unchanged|
|Prices are provided by our partner network and may not reflect the market. Your rate can be different. Click here for an individual price offer. See our rate assumptions here.|
COVID-19 Mortgage Updates: Mortgage lenders are changing interest rates and rules due to COVID-19. To learn how the coronavirus could affect your home loan, Click here.
Should You Lock A Mortgage Rate Today?
Without something unexpected, it’s likely that August will end with mortgage rates slightly higher than it was at the beginning. But the movements in the past few weeks have been gentle and directionless. So you probably haven’t lost or gained much by fluctuating your course.
But the risks of continuing to do so remain real. Because almost all experts forecast smaller or larger increases overall. The problem is, nobody knows when.
My personal recommendations therefore remain:
- LOCK when close in 7th Days
- LOCK when close in fifteen Days
- LOCK when close in 30th Days
- HOVER when close in 45 Days
- HOVER when close in 60 Days
With so much uncertainty right now, however, your instincts could turn out to be as good as mine – or better. So let your gut instinct and your personal risk tolerance guide you.
What is moving the current mortgage rates
That way, mortgage rates stay calm. They continue to drift up and down, but hardly move when measured for weeks.
And this week they dodged a bullet when Federal Reserve Chairman Jerome Powell’s speech yesterday revealed nothing new. He confirmed that the Fed would slow down its efforts to keep mortgage rates artificially low later this year and later stop (“cut”) it. But everyone already knew that.
And regular readers will be relieved that I can finally stop chatting about sneaking out every day. However, the problem hasn’t gone away and will return in a couple of weeks.
In the meantime
Meanwhile, economic news is affecting mortgage rates. But this, too, is a less direct relationship than it usually is.
In normal times, mortgage rates rise when the business news is good and fall when the news is bad. But that’s not always the case at the moment.
Take next Friday’s employment report as an example. This is often the most influential of all the monthly economic reports, sometimes rivaled only by inflation reports. And a great report on Friday (a lot more jobs and a higher average hourly wage) would usually drive mortgage rates up.
But maybe not this time. Because investors are still keeping an eye on the Fed. And great employment data could pull ahead of the dates when mortgage rates and government bond yields are kept low – and shorten the time it starts raising its own rates.
As a result, some investors consider good economic news to be detrimental to their interests as it may accelerate the end of the Fed’s monetary policy. And they enjoy this special party.
The Fed remains unlikely to hike rates well into 2022, or possibly sometime in ’23. And it’s important to distinguish between the Fed’s own rates and mortgage rates. A change in Fed interest rates usually has a direct impact on the interest rates on floating rate loans, including credit cards, auto loans, and others. However, mortgage rates are set differently and largely independently of the Fed (see below for details).
Economic reports next week
Please read the last few paragraphs for information on next week’s key economic report, Friday’s Employment Report. It’s hard to overestimate how influential this can be.
None of the other economic reports listed below are unlikely to cause much movement in the markets unless they include shockingly good or bad data. Additionally, regular readers know that investors have ignored most of the economic reports in the past few months. Therefore, the effects of the following may differ from the usual ones:
- Tuesday – August consumer confidence index
- Wednesday – August ADP Employment Report (Private Sector Jobs) and Manufacturing Index from Institute for Supply Management (ISM). Plus construction expenses in July
- Thursday – Weekly new applications for unemployment insurance until August 28th. Plus factory orders in July
- Friday – August Employment report consisting of non-farm payrolls, unemployment rate and average hourly wage. Plus ISM services index, also for August
Friday is the big day again.
Mortgage rates forecast for next week
Now that the tapering is out of the way (for a couple of weeks), I see little reason to expect sharp changes in mortgage rates anytime soon. And I guess so Mortgage rates next week will be unchanged or hardly changed.
Mortgage and refinancing rates usually move in parallel. And a gap that had grown between the two was made by the recent scrapping of the adverse market refinancing fee.
This is how your mortgage rate is determined
Mortgage and refinancing rates are generally determined by prices on a secondary market (similar to the stock or bond markets) that trade mortgage-backed securities.
And that depends heavily on the economy. So mortgage rates are typically high when things are going well and low when the economy is in trouble.
But you play a huge role in determining your own mortgage rate in five ways. And you can significantly affect it by:
- Find your best mortgage rate – they vary widely from lender to lender
- Boost Your Credit Score – Even a small increase can make a big difference to your rate and payments
- Save the Biggest Down Payment possible – lenders like you to have real skin in this game
- Keep Your Other Borrowings Modest – The lower your other monthly obligations, the higher the mortgage you can afford
- Choose Your Mortgage Carefully – Are You Better Off With A Conventional, FHA, VA, USDA, Jumbo, Or Other Loan?
The time you spend getting these ducks in a row can result in you winning lower prizes.
Remember, it’s not just a mortgage rate
Remember to count all of the upcoming home ownership costs when figuring out how much a mortgage you can afford. So concentrate on your “PITI”. This is yours P.rincipal (pays back the amount borrowed), IInterest (the price of borrowing), (property) TAxles and (homeowners) IInsurance. Our Mortgage calculator can help with these.
Depending on your mortgage type and the amount of your down payment, you may also need to pay for mortgage insurance. And that can easily reach three digits every month.
But there are other potential costs as well. So you have to pay community contributions if you choose to live with an HOA. And wherever you live, you have to expect repair and maintenance costs. There is no landlord to call if something goes wrong!
Eventually, you will find it hard to forget about closing costs. You can see this in the specified annual percentage rate (APR). Because this effectively spreads it out over the life of your loan and makes it higher than your pure mortgage rate.
But maybe you can get help with these closing costs and Your deposit, especially if you are a first-time buyer. Read:
Mortgage rate methodology
The mortgage reports receive rates based on selected criteria from multiple credit partners daily. We’ll find an average interest rate and an APR for each type of loan shown on our chart. Since we average a range of prices, this will give you a better idea of what you might find in the market. In addition, we determine average interest rates for the same types of credit. Example: FHA fixed with FHA fixed. The result is a good snapshot of the daily rates and how they change over time.