Today’s mortgage and refinance rates
Average mortgage rates rose yesterday. And, after three consecutive business days of rises, they’re back up to a level last seen on July 20. That’s based on Mortgage News Daily’s (MND’s) data for 30-year fixed-rate mortgages (FRMs).
Mortgage rates may well continue higher next week. But that’s far from certain. Read on to discover why we’re at a “nobody knows” point.
Current mortgage and refinance rates
|Conventional 30 year fixed||2.773%||2.773%||+0.03%|
|Conventional 15 year fixed||1.99%||1.99%||Unchanged|
|Conventional 20 year fixed||2.49%||2.49%||+0.12%|
|Conventional 10 year fixed||1.851%||1.883%||+0.01%|
|30 year fixed FHA||2.688%||3.343%||+0.11%|
|15 year fixed FHA||2.4%||3.001%||+0.03%|
|5/1 ARM FHA||2.5%||3.207%||Unchanged|
|30 year fixed VA||2.327%||2.499%||+0.08%|
|15 year fixed VA||2.133%||2.453%||+0.02%|
|5/1 ARM VA||2.5%||2.386%||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.|
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?
If I had a rate to lock, I’d do so now. Average mortgage rates remain exceptionally low, with most borrowers still getting a rate beginning with a 2. But the landscape has significantly changed since last week.
Yes, markets are still acting in mystifying ways. And it’s certainly possible that we’ll see further falls soon. That’s why I’ve left my rate lock recommendations at Float for those with longer to wait before needing to lock. But the associated risks are higher than they were a week ago. And cautious people might want to lock now regardless of their closing date.
For now, I’ve made only a minor change to my personal recommendations. But they could soon be back to a sea of red if things don’t improve.
- LOCK if closing in 7 days
- LOCK if closing in 15 days
- LOCK if closing in 30 days
- FLOAT if closing in 45 days
- FLOAT 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 be guided by your gut and your personal tolerance for risk.
What’s moving current mortgage rates
We’re at one of those “nobody knows” points. True, when it comes to mortgage rates, that’s often the case.
But we currently face two similarly likely scenarios:
- Mortgage rates return to their downward trend because this week’s falls have been a result of one-time events
- Those rates continue to climb because this week’s events are tipping points that have fundamentally changed investor sentiment
Those events certainly have the potential to change everything.
The more important happened yesterday and was the publication of the monthly employment situation report. Those reports have been disappointing recently. And that’s fueled concerns that the economic recovery might be patchy and unsustainable. But yesterday’s data exceeded expectations by far.
Are one month’s figures enough to persuade investors that the recovery is as strong as most other data suggest? We’ll have a better idea as next week unfolds.
The other major event was a speech by Federal Reserve Vice Chair Richard H. Clarida. In it, he signaled that the Fed is looking to taper its asset purchases sooner than it had previously suggested.
Regular readers will know all about tapering. But, briefly, the Fed’s currently buying mortgage-backed securities (MBSs, a type of bond that actually determines mortgage rates) at a rate of $40 billion a month. That’s keeping mortgage rates artificially low. So, when the Fed starts to “taper” (gradually reduce) those purchases, those rates are likely to rise, possibly sharply.
So far, markets have acted as if this won’t happen until well into next year. But it’s looking increasingly likely that a 2021 date will see an announcement. And perhaps soon. Earlier this week, Federal Reserve Gov. Christopher Waller told CNBC:
I think you could be ready to do an announcement by September. That depends on what the next two jobs reports do. If they come in as strong as the last one, then I think you have made the progress you need. If they don’t, then I think you are probably going to have to push things back a couple of months.
— Bloomberg, “Fed’s Waller Says September Taper Call May Be Warranted,” Aug. 2, 2021
Mr. Waller said that on Monday, before yesterday’s great jobs report. And, if enough investors believe him and Mr. Clarida, we could see mortgage rates begin to rise consistently.
Of course, investors have for some months been proving that they’re more than capable of shrugging off any information that they don’t want to hear. So here we are, at another “nobody knows” point.
Economic reports next week
If this week was all about employment, the next one is all about inflation. By far the most important report is likely to be Wednesday’s consumer price index for July. But there are a few others, including July’s producer price index (Thursday) and import price index (Friday).
None of the other economic reports listed below is likely to cause much movement in markets unless it includes shockingly good or bad data. Moreover, regular readers will know that investors have been ignoring most economic reports in recent months. So the effects of the following may be different from usual:
- Monday — June job openings
- Tuesday — Productivity and unit labor costs for the second quarter (preliminary readings)
- Wednesday — July consumer price index (CPI) and core CPI, which is CPI with volatile energy and food prices stripped out
- Thursday — July producer price index. Plus weekly new claims for unemployment insurance to Aug. 7
- Friday — July import price index. Plus the first reading of the August consumer sentiment index
Wednesday’s the big day.
Mortgage interest rates forecast for next week
I’ve repeatedly said we’re at a “nobody knows” point. But, if I had to guess, I’d say mortgage rates may move higher this week.
Mortgage and refinance rates usually move in tandem. And a gap that had grown between the two has been largely eliminated by the recent scrapping of the adverse market refinance fee.
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. 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, FHA, VA, USDA, jumbo or another loan?
Time spent getting these ducks in a row can see you winning lower rates.
Remember, it’s 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) you’ll be quoted. 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.