September 24, 2021

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Mortgage and refinance rates today, August 19, 2021

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Today’s mortgage and refinance rates 

Average mortgage rates nudged higher yesterday. Since the start of August, on business days, we’ve had six falls and six rises, plus one no-movement day, according to Mortgage News Daily’s (MND’s) figures. But, unfortunately, the rises have been bigger than the falls. Still, many rates still begin with a 2, which makes them extraordinarily low by any standards.

And things might look up. Because mortgage rates today look likely to fall, in spite of good weekly unemployment numbers this morning. But, as always, that could change as the day progresses.

Find and lock a low rate (Aug 22nd, 2021)

Current mortgage and refinance rates 

Program Mortgage Rate APR* Change
Conventional 30 year fixed 2.79% 2.79% +0.04%
Conventional 15 year fixed 1.99% 1.99% Unchanged
Conventional 20 year fixed 2.377% 2.377% Unchanged
Conventional 10 year fixed 1.851% 1.892% +0.01%
30 year fixed FHA 2.688% 3.343% Unchanged
15 year fixed FHA 2.396% 2.997% +0.02%
5/1 ARM FHA 2.5% 3.207% -0.01%
30 year fixed VA 2.293% 2.464% +0.04%
15 year fixed VA 2.25% 2.571% 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.
Find and lock a low rate (Aug 22nd, 2021)

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?

To me, locking your rate seems the safer bet, regardless of when you’re due to close. Yes, it’s possible we’ll see further falls. But they’re likely to be limited. Meanwhile, the risks of sudden and sharp rises remain heightened.

But nobody can be certain how rates will move. So, those who enjoy gambling might yet win by continuing to float.

And, for now, my personal rate lock recommendations remain:

  • 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, 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 edged down to 1.25% from 1.27%. (Good for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields
  • Major stock indexes were lower shortly after opening. (Good 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 fell to $63.50 from $66.78 a barrel. (Good for mortgage rates*.) Energy prices play a large role in creating inflation and also point to future economic activity. 
  • Gold prices held steady at $1,788 an ounce. (Neutral 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 indextumbled again to 21 from 31 out of 100. (Good 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 edge lower. But be aware that “intraday swings” (when rates change direction during the day) are a common feature right now.

Find and lock a low rate (Aug 22nd, 2021)

Important notes on today’s mortgage rates

Here are some things you need to know:

  1. 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
  2. Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
  3. 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
  4. When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
  5. 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

Chances are, yesterday’s rise in mortgage rates was down to that day’s publication of the minutes of the last meeting of the Federal Open Market Committee (FOMC). That’s the Federal Reserve’s monetary policy body.

And yet, ironically, those minutes said very little that was unknown. Before yesterday, investors were typically assuming that “Most Fed officials believe stimulus could start winding down this year,” as a headline in this morning’s Financial Times summed up the minutes. Now they know.

But they still don’t know precisely when that winding down might happen. Yesterday, CNBC interviewed (clip) Carl Tannenbaum, chief economist at Northern Trust. And he reckoned that Sept. would be too soon for the Fed to announce a date, though, he thought, sometime this year looked highly likely. But others disagree. And some are even expecting an announcement at this year’s Economic Policy Symposium in Jackson Hole, Wyoming, which starts in a week’s time (Aug. 26-28).

How this affects mortgage rates

Regular readers will recognize “winding down” as a synonym for tapering. And that involves the Fed slowing and later stopping its currently frenetic purchases of bonds, within a process called quantitative easing (QE). Since June 12, 2020, QE has seen the Fed purchase roughly $1.46 trillion in mortgage-backed securities (MBSs), according to the Federal Reserve Bank of New York. That includes $40 billion a month in new money plus reinvestments of principal payments from agency MBS and agency debt.

Such vast sums clearly distort the market in MBSs. And Fed purchases have been keeping mortgage rates artificially low during that time. MBSs are the bonds that directly determine mortgage rates (there are other less important influences) so, when those purchases end, mortgage rates will almost certainly rise.

How much they’ll rise is still anyone’s guess. In its Nightcap e-newsletter yesterday evening, CNN Business summed up some of the threats that are currently worrying investors:

And in case anyone missed it, there’s plenty to fret about. We’re still fighting a highly deadly variant of COVID-19, inflation is rising, and investors are nervous as all hell that the Fed is going to begin tapering its easy-money policies. 

The Delta variant is the one thing on that list that might push mortgage rates lower. But rising inflation and tapering are likely to push them higher. But when?

For more background, read Saturday’s weekend edition of this column.

Mortgage rates and inflation: Why are rates going up?

Recently — updated today

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 have been mostly replaced by falls since April, though typically small ones. Freddie’s Aug. 19 report puts that weekly average at 2.86% (with 0.7 fees and points), down from the previous week’s 2.87%.

Expert mortgage rate forecasts — updated today

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 Aug. 19, Freddie’s on July 15 and the MBA’s on July 21.

Forecaster Q3/21 Q4/21 Q1/22 Q2/22
Fannie Mae 2.8% 2.9%  3.0% 3.0%
Freddie Mac 3.3% 3.4%  3.5% 3.6%
MBA 3.2% 3.4%  3.8% 4.0%

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.

Verify your new rate (Aug 22nd, 2021)

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.

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