Today’s mortgage and refinancing rates
Average mortgage rates dropped unexpectedly yesterday. And worth the amount. They are still far from their historic lows set in January. But they are gradually approaching.
Read why CNBC spoke yesterday about the current “mystifying bond market behavior” that keeps bond yields (and therefore mortgage rates) low when they usually rise. But I am among those who are perplexed. And so I have to keep saying that mortgage rates next week are unpredictable…
Current mortgage and refinancing rates
|Program||Mortgage rate||Annual interest rate *||Change|
|Regular 30 year fixed||2.811%||2.811%||Without changes|
|Regular 15 year fixed||2.125%||2.125%||Without changes|
|Regular 20 year fixed||2.625%||2.625%||Without changes|
|Regular 10 year fixed||1.945%||1.965%||-0.01%|
|30 year fixed FHA||2.681%||3.336%||+ 0.04%|
|15 year fixed FHA||2,521%||3.122%||+ 0.04%|
|5/1 ARM FHA||2.5%||3.213%||Without changes|
|30-year fixed VA||2.25%||2.421%||Without changes|
|15 year fixed VA||2.25%||2.571%||Without changes|
|5/1 AWP VA||2.5%||2.392%||Without changes|
|Rates are provided by our partner network and may not reflect the market. Your rating may be different. Click here for a personalized quote… See our rate suggestions here…|
COVID-19 Mortgage News: Mortgage lenders are changing rates and rules due to COVID-19. For the latest information on how the coronavirus can affect your home loan, Click here…
Should you fix your mortgage rate today?
Mortgage rates are dropping to recent lows and not a million miles below their all-time lows set in January. And now there are several signs of the recovery that I have been predicting for a while. So you may well leave your rate floating.
However, the forces that should have pushed the increase in mortgage rates have not gone anywhere. And they can intervene at any time. So avoid complacency and be prepared to block at any time.
This is all too complicated to be included in my simplified blocking or float advice below. So, my personal recommendations still apply:
- LOCK if closing 7 days
- LOCK if closing fifteen days
- LOCK if closing thirty days
- LOCK if closing 45 days
- LOCK if closing 60 days
However, with so much uncertainty at the moment, your instincts can easily turn out to be as good as mine – or even better. So be guided by your instinct and personal risk tolerance.
What drives current mortgage rates
I’ve had a lot of balls on my face lately because the mortgage rate hike I predicted didn’t materialize. So I was delighted yesterday when CNBC reported that “the bond market is challenging Wall Street forecasters” with “mystifying” behavior. So I’m not alone. Being alone is never fun.
The bond market is not following the scenario that many expected this summer, in which interest rates would rise amid a booming economy. Instead, long-term Treasury yields are falling, which could be a warning to the economy.
– CNBC, “Mysterious behavior in the bond market could last all summer, “July 16, 2021
This is important because mortgage rates often hide the yield on 10-year Treasuries. And they’ve been doing it lately.
Why is this strange behavior?
CNBC has suggested several reasons for the strange behavior:
- Investors are strategically positioning themselves to take advantage of future events.
- Inflation could force the Federal Reserve to stop buying assets and raise rates earlier than planned.
- The technical reasons are basically that some investors “go short,” which means they are placing new bets to hedge against old ones coming back to bite them.
- Potential peak in growth – some think the economic recovery has peaked and is now slowing down.
The title of the article stated that this strange behavior “could last all summer.” And maybe. But none of these reasons (except # 2) seems to me to be permanent.
Is it still thriving?
For example, yesterday’s weekly e-newsletter on economics from Comerica Bank began like this: “US economic data this week was in line with very strong real GDP. [gross domestic product] growth in the second quarter ”. And yesterday’s June retail sales were better than expected. So, while it is possible that recovery is slowing down, there is no clear reason for it.
But, of course, the possibility of inflation (a by-product of the boom), forcing the Fed to reduce the volume of asset purchases, remains highly relevant. Although Fed Chairman Jerome Powell masterfully reassured lawmakers on Capitol Hill (and in the markets) earlier this week, markets can only continue to believe him as long as inflation data confirms his theory.
And, if the Fed does indeed cut back on asset purchases, we are likely to see a sharp rise in mortgage rates. Because it was the last time it happened.
Economic reports next week
After a couple of hard weeks of economic reports, we should have had an easy one. And here it is.
None of the economic reports listed below are likely to cause much movement in the markets unless they include shockingly good or bad data. Moreover, regular readers know that in recent months, investors have ignored most economic reports. Thus, the following effects may differ from the usual ones:
- Monday – July National Homebuilders Association Index
- Tuesday – June building permit and start of construction
- Thursday – June resale sales. And the June index of leading economic indicators. Plus new weekly unemployment insurance claims until July 17
- Friday – July Markit Purchasing Managers’ Index (PMI) for Manufacturing and Services.
Chances are, you can postpone economic reports this week. Markets are likely to do so.
Forecast of interest rates on mortgages for the next week
Given that I am among the perplexed (see above) of the recent market behavior, you will excuse me for sticking to: mortgage rates next week are essentially unpredictable… I will return to correct predictions when I understand what is going on.
Mortgage and refinancing rates usually change at the same time. But keep in mind that refinancing rates are currently slightly higher than mortgage rates.
However, yesterday’s regulatory announcement means the gap should close by August 1. Or perhaps even earlier.
How the mortgage interest rate is determined
Mortgage and refinancing rates are usually determined by prices in the secondary market (similar to the stock or bond market) where mortgage-backed securities are traded.
And this is highly dependent on the economy. Thus, mortgage rates are usually high when things are going well and low when the economy is in trouble.
But you play a big role in determining your own mortgage interest rate in five ways. You can significantly influence this:
- Find the best mortgage rate – these vary greatly from lender to lender.
- Improving your credit score – even a small jump can make a big difference in your rates and payments
- Save the biggest down payment – lenders like you will have real skin in this game.
- Keep your other loan modest – the smaller your other monthly commitments, the more mortgage you can afford.
- Choose your mortgage carefully – would you rather take a regular, FHA, VA, USDA, large or other loan?
Taking the time to get these ducks in a row can result in you winning lower rates.
Remember, this is not just a mortgage rate
Be sure to calculate all the upcoming homeownership costs when deciding how much mortgage you can afford. So focus on your PETE. It’s yours Principal (pays the loan amount), Iinterest (borrowing price), (property) Taxes, and (homeowners) Iinsurance. Our mortgage calculator can help with this.
Depending on your type of mortgage and the amount of your down payment, you may also have to pay for mortgage insurance. And that can easily be expressed in three-digit numbers every month.
But there are other potential costs too. Therefore, you will have to pay the dues to the homeowners association if you decide to live somewhere with an HOA. And wherever you live, you should expect repair and maintenance costs. When something goes wrong, there is no owner to call!
Finally, it will be difficult for you to forget about the closing costs. You can see them in the Annual Percentage Rate (APR) that you specify. Because it effectively distributes them over the term of your loan, making it higher than your normal mortgage rate.
But you may be able to get help with these closing costs. as well as your down payment, especially if you are buying for the first time. To read:
Mortgage rate methodology
Mortgage reports get rates based on selected criteria from several credit partners every day. We get the average rate and annual interest rate for each loan type displayed in our chart. Since we average a set of rates, this gives you a better idea of what you can find on the market. In addition, we average rates for the same loan types. For example, FHA is fixed with fixed FHA. The end result is a good snapshot of daily rates and how they change over time.