Today’s mortgage and refinance rates
Average mortgage rates rose again yesterday. And they begin this Friday only a little lower than they did this time last week.
This morning’s excellent employment situation report sent yields on 10-year Treasury notes shooting up. And that almost certainly means that mortgage rates today will move appreciably higher. But read on to discover why the rise just might become less sharp as the hours pass.
Current mortgage and refinance rates
|Conventional 30 year fixed||2.742%||2.742%||+0.05%|
|Conventional 15 year fixed||1.99%||1.99%||Unchanged|
|Conventional 20 year fixed||2.375%||2.375%||Unchanged|
|Conventional 10 year fixed||1.851%||1.877%||Unchanged|
|30 year fixed FHA||2.576%||3.228%||+0.01%|
|15 year fixed FHA||2.366%||2.966%||Unchanged|
|5/1 ARM FHA||2.5%||3.207%||Unchanged|
|30 year fixed VA||2.25%||2.421%||Unchanged|
|15 year fixed VA||2.114%||2.434%||Unchanged|
|5/1 ARM VA||2.5%||2.386%||+0.01%|
|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.|
COVID-19 mortgage updates: Mortgage lenders are changing rates and rules due to COVID-19. To see the latest on how coronavirus could impact your home loan, click here.
Should you lock a mortgage rate today?
Yesterday, Freddie Mac Chief Economist Sam Khater wrote:
With global market uncertainty surrounding the Delta variant of COVID-19, we saw 10-year Treasury yields drift lower and consequently mortgage rates followed suit. The 30-year fixed-rate mortgage dipped back to where it stood at the beginning of 2021, and the 15-year fixed remained at its historic low. This bodes well for those still looking to refinance, renovate or even purchase a new home.
— Freddie Mac, “Mortgage Rates Dip,” Aug. 5, 2021
So, you now have to decide whether to seize these certain benefits by locking immediately or take a chance on further falls by continuing to float.
Of course, only you can make that decision. But my personal rate lock recommendations are:
- LOCK if closing in 7 days
- LOCK if closing in 15 days
- FLOAT if closing in 30 days
- FLOAT if closing in 45 days
- FLOAT if closing in 60 days
However, I don’t claim perfect foresight. And your personal analysis could turn out to be as good as mine — or better. So you might choose to be guided by your instincts and your personal tolerance for risk.
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 jumped to 1.29% from 1.21%. (Very bad for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields, though less so recently
- Major stock indexes were mostly higher shortly after opening. (Bad 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
- Oil prices climbed to $69.08 from $68.47 a barrel. (Bad for mortgage rates*.) Energy prices play a large role in creating inflation and also point to future economic activity.
- Gold prices fell to $1,771 from $1,804 an ounce. (Bad for mortgage rates*.) In general, it’s 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 — rose to 39 from 31 out of 100. (Bad 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, so far mortgage rates today look likely to rise. 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?
Today and soon
The official employment situation report contains arguably the most important economic data seen in any month. Recently, inflation reports have been vying for influence. But it’s hard to overstate how critical employment figures are to the economy, the country and investors.
Normally, a good employment report sees investors sell bonds and buy stocks, which are more profitable and less risky when the good times are rolling. And that sees mortgage rates, which are mainly determined by yields on a form of bond called a mortgage-backed security (MBS), rise. Bond prices and bond yields move inversely.
This morning’s jobs report
And that’s what happened this morning, immediately after the July report was released at 8:30 a.m. (ET). It was much better than expected, with the country adding 943,000 jobs to its nonfarm payrolls. Most analysts were forecasting between 845,000 and 870,000 new jobs that month.
Meanwhile, the unemployment rate dropped to 5.4% in July from 5.9% in June. And average hourly earnings were up 0.4%, as they were the previous month. Writing for The New York Times hours before the figures came out, Andrew Ross Sorkin explored several alternative outcomes, including the one that transpired:
Strong job growth and hefty wage gains: This is great, for now. The post-pandemic economy is in full swing, with workers reaping the rewards. But the recovery is likely closer to the end than the beginning. That puts ambitious government spending plans in jeopardy. The Fed may taper its support sooner, possibly leading to market tantrums.
— NYT, DealBook e-newsletter, Aug 6, 2021
Why mortgage rates might end today only moderately higher
Markets responded to this morning’s excellent report as you’d expect: with appreciably higher bond yields and therefore higher mortgage rates. But it’s possible that enthusiasm could wane as the day wears on and that those rates may be less sharply higher by this evening. How come?
Well, Aaron Ross Sorkin already hinted at a reason. Some investors figure that a good report might hasten the Federal Reserve’s plans to “taper” (gradually reduce) its purchases of mortgage-backed securities, on which it’s currently spending $40 billion a month. And, to them, maintaining that support can be as valuable as an economy that’s recovering strongly.
Sometimes, it takes markets a while to decide on a considered response to such news. So, at 10 a.m. (ET), very little is certain about how today will play out for mortgage rates.
For more background, read Saturday’s weekend edition of this column.
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. But then the trend reversed and rates rose.
However, those rises were mostly replaced by falls since April, though typically small ones. Freddie’s Aug. 5 report puts that weekly average at 2.77% (with 0.6 fees and points), down from the previous week’s 2.80%.
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 quarters of 2021 (Q3/21 and Q4/21) and the first two quarters of 2022 (Q1/22 and Q2/22).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on July 19, Freddie’s on July 15 and the MBA’s on July 21.
However, given so many unknowables, the current crop of forecasts might be even more speculative than usual.
All these forecasts expect higher mortgage rates soon. But the differences between the forecasters are stark. And it may be that Fannie isn’t building in the Federal Reserve’s tapering of its support for mortgage rates while Freddie and the MBA are.
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.