Today’s mortgage and refinancing rates
Average mortgage rates rose yesterday, but only by the smallest measurable amount. However, it was a relief after a full week of climbing, which included three unusually large jumps.
My best guess is that mortgage rates may remain the same or fall slightly next week… Because the markets often stop and correct after such a sharp weekly rally. But I would not deign to predict this guess. Too much is currently unknown to be sure of anything.
Current mortgage and refinancing rates
|Program||Mortgage rate||Annual interest rate *||Change|
|Regular 30-year fixed||2.936%||2.936%||Without changes|
|Regular 15 year fixed||2.37%||2.37%||+ 0.01%|
|Regular 20 year fixed||2.75%||2.75%||Without changes|
|Regular 10 year fixed||2.075%||2.112%||Without changes|
|30 year fixed FHA||2.806%||3.464%||-0.01%|
|15 year fixed FHA||2.688%||3.291%||+ 0.01%|
|5 years ARM FHA||2.5%||3.213%||Without changes|
|30-year fixed VA||2.375%||2,547%||Without changes|
|15 year fixed VA||2.25%||2.571%||Without changes|
|5 years of ARM 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?
So this week the risks of sailing have become apparent. But what we saw was probably not the sharp and steady rise that I predicted. Now it will probably come later this year.
So there is hope that mortgage rates may drop a bit soon, perhaps next week. Read on to find out more. If I was still swimming, I would hold on and try to reduce my losses by waiting for at least a couple of days of falls. But even this is associated with a certain risk.
However, apart from this, my personal recommendations remain:
- 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
We need to talk more about the Federal Reserve System. Because it was the bidding that anticipated or responded to his midweek press conference and the report behind the sharp hike in mortgage rates this week. That’s why.
Right now, the Fed is spending $ 40 billion a month buying Mortgage Backed Securities (MBS). And that is the price of those that actually determine the mortgage rates.
Stop artificially low mortgage rates?
This additional demand for these bonds drives up their prices, which keeps their yields lower than they would have been without the intervention of the Fed. Yes, higher prices = lower yields (and rates) may seem counterintuitive. But this is mathematical certainty.
Thus, the Fed is currently artificially lowering mortgage rates. But everyone knows that it cannot go on this long, especially since the economy is recovering and inflation is growing.
What happened this week is that the Fed admitted that inflation was higher than expected. And he said he would start talking seriously about a slowdown and eventually a halt in asset purchases (including MBS) from the next policy meeting (July 27-28).
If inflation continues to rise rapidly (or enough people expect it to continue to rise), it is entirely possible that the Fed will then begin to phase out (“shrink,” in Fedspeak parlance) its MBS purchases. But most commentators think it is more likely to happen later this year. These are the dates for his other two-day policy meetings later this year:
- September 21-22
- November 2-3
- December 14-15
There is also the possibility of an announcement at the Bretton Woods conference in late August. Whenever an advertisement comes in, mortgage rates can rise sharply thereafter.
It is now entirely possible that the markets won’t wait for the announcement. Indeed, it may even be that the rally we have seen this week is the beginning of an uptrend. But that seems relatively unlikely. And many now seem to be anticipating the announcement and subsequent surge sometime between August and December.
Of course, this does not mean that from now on there will be no more ups than downs. But I suspect that they will be fairly evenly balanced and that rates will slowly drift upward for most of the weeks until the announcement appears.
Of course, here we are looking at my personal weighting of the probabilities. And nothing is known. Indeed, there is always the chance that some catastrophic event will undermine the recovery, reduce inflation and cause mortgage rates to fall. But none of them need it.
Slightly less good news
Last week I reported a new phenomenon. The weak dollar attracted foreign investors to buy US investments, likely including mortgage-backed securities. And that could keep mortgage rates lower than they would otherwise.
But Fed action this week has strengthened the dollar. So the influence of foreigners on mortgage rates may be less than I hoped. Unless the dollar weakens again.
Economic reports next week
The three most important economic reports this week are due out on Friday. One of these days is related to inflation (Core PCE), which is now one of the two hottest topics for investors. (The other is employment.) The other two can show how the recovery is progressing: data on personal income and consumer spending. All these numbers refer to May.
But the others listed below are unlikely to cause much movement in the markets unless they include shockingly good or bad data. Moreover, regular readers know that the markets have ignored most economic reports in recent weeks. Thus, the following effects may differ from the usual ones:
- Tuesday – May: resale sale
- Wednesday – May Markit Purchasing Managers’ Indices (PMI) for Manufacturing and Services
- Thursday – May Orders for durable goods. And the final revision of the gross domestic product (GDP) indicator for the first quarter of 2021. Plus new weekly claims for unemployment insurance until June 19.
- Friday – May Personal Income, Consumer Spending and PCE Core Price Index. Plus First Reading of the University of Michigan Consumer Sentiment Index for June
Watch out for Friday!
Forecast of interest rates on mortgages for the next week
After a meteoric rise, this week we have a break. And I guess that mortgage rates may drop slightly next week… But it is still possible that the growth of the markets is not over yet.
Mortgage and refinancing rates usually change at the same time. But keep in mind that refinancing rates are currently slightly higher than mortgage rates. This gap is likely to remain fairly constant as they change.
Meanwhile, a recent legislative change has made the bulk of investment property and vacation home mortgages more expensive.
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. Are you better off taking a regular loan, FHA, VA, USDA, large or other loan?
Taking the time to get these ducks in a row can result in you getting 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 amount you borrowed), 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 translate into three-digit numbers every month.
But there are other potential costs too. Thus, 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 this is your first time buying an item. 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 in 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.