Today’s mortgage and refinancing rates
Average mortgage rates remained unchanged yesterday. They are likely to fall that morning due to the employment report. But they are back where they started.
Based on recent activity, I expect that next week mortgage rates will hardly change… Yes, they will most likely rise and fall on different days. But we will be out of luck if then the steady upsurges that I expect begin.
Current mortgage and refinancing rates
|Program||Mortgage rate||APRIL *||Change|
|Regular 30 year fixed||2.874%||2.874%||-0.06%|
|Regular 15 year fixed||2.2%||2.2%||-0.04%|
|Regular 20 year fixed||2.75%||2.75%||-0.03%|
|Regular 10 year fixed||1.951%||1,988%||-0.04%|
|Regular 5 year old ARM||3.625%||3.224%||+ 0.05%|
|30 year fixed FHA||2.695%||3.351%||-0.05%|
|15 year fixed FHA||2,422%||3.023%||-0.04%|
|5 years ARM FHA||2.5%||3.188%||Without changes|
|30-year fixed VA||2,346%||2,518%||-0.03%|
|15 year fixed VA||2.25%||2.571%||Without changes|
|5 years of ARM VA||2.5%||2,366%||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?
While the daily ups and downs in mortgage rates can make you feel happy or sad, they’ve gotten nowhere lately.
Just look at Freddie MacAverage weekly rate on 30-year fixed rate mortgages over the past few weeks. On May 6, it was 2.96%, the next week – 2.94%, then 3%, 2.95% and on Thursday 2.99%. Nobody gets rich on such small changes.
But readers who are still hesitant are taking big risks for these small potential rewards. Because almost all economists and industry analysts expect strong growth in the near term. They just don’t know when.
And therefore, my personal recommendations remain valid:
- 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
Yesterday’s employment report (formally called the “employment report”) for May was much better than April. The number of jobs increased by 559,000 last month, up from 278,000 in the previous month. And the unemployment rate fell to 5.8% in May from 6.1% in the previous month.
In normal times, that would be great. But we are in the process of economic recovery. And employment lags behind other data.
In his statement yesterday, US Labor Secretary Marty Walsh named reasons why he believed employment growth was slower than many expected. And he talked about:
… The problems they are [workers] and their families face the challenge of finding affordable childcare, caring for elderly parents and grandparents, and overcoming the barriers created by decades of income and race and gender inequality. These issues are also reflected in our job data, which is why the American Employment Plan and the American Family Plan are so important. We need to invest in our workforce and our communities to achieve inclusive recovery and a competitive economy.
– US Department of Labor, “Statement by US Secretary of Labor Walsh on May Job Report, “June 4, 2021
Of course, others take a different view, arguing that higher unemployment benefits discourage workers from switching to low-paying jobs.
What does this mean for mortgage rates
Usually better than expected job posting results in slightly higher mortgage rates. But yesterday turned out to be worse than expected, and the morning started with slightly lower mortgage rates. However, they recovered and remained unchanged by the end of the day. Investors may have agreed with Yale economist Paul Krugman, who wrote for the New York Times yesterday:
Don’t pay too much attention to today’s job report; it turned out to be slightly below expectations, but given the noisy data (and the extent to which the numbers are revised frequently), it told us very little that we didn’t already know.
But what would happen if yesterday’s report exceeded expectations with, say, 1 million new jobs? This could well provoke the steady rise in mortgage rates that many of us expect.
The Fed is still ahead and in the center
However, this was not only for the usual reason: mortgage rates tend to be higher the better the economy. Rates would likely see a sharp hike on renewed expectations that the Federal Reserve would be forced to end its asset purchase program ahead of schedule. And the last time that happened, mortgage rates skyrocketed. You can read more about this so-called conical tantrum at latest version of this weekend release…
So it may well be that yesterday’s so-so employment report gave borrowers a continuation of the current depression that has calmed mortgage rates. Of course, there may be other events that start raising rates earlier. But we can wait for the June employment report next month before we start fearing noticeably higher rates again.
There is nothing definite
The late Harvard economist John Kenneth Galbraith once remarked:
The sole function of economic forecasting is to make astrology respectable.
And he was right. Economists can pontify whatever they want. But events can trump any model and make forecasters look stupid.
All you and I can do is weigh the likely odds of future scenarios. And right now, higher mortgage rates look very likely – and pretty soon.
But they are not inevitable. However, I would not bet my future monthly mortgage payments in the hope that something unlikely will happen that will push them down.
Economic reports next week
Employment may be one of the factors affecting markets, but inflation is another. And Thursday brings a key indicator of the latter. It is the Consumer Price Index (CPI) and the core CPI, which is the CPI excluding volatile food and energy prices.
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 – April Jobs and Trade Deficits. Plus May Small Business Survey
- Thursday – May Consumer Price Index (CPI) along with core CPI. Plus new weekly unemployment insurance claims
- Friday – June Consumer Sentiment Index
Stay tuned for Thursday this week.
Forecast of interest rates on mortgages for the next week
After so many significant moves in recent weeks, another uninteresting period may well await us. So I’m waiting for this mortgage rates next week will not change or practically will not change… But it is always possible that something will turn the balance and significantly lower or, more likely, raise mortgage rates.
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
- You will save the largest 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 size 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. 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 final 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 in the market. In addition, we average rates for the same loan types. For example, fixed FHA and fixed FHA. The end result is a good snapshot of daily rates and how they change over time.