Today’s mortgage and refinancing rates
Average mortgage rates rose yesterday. But they dropped throughout the week. Eventually they took a break, although too small to make much of a difference.
Critical announcements by the Federal Reserve next Wednesday could raise or lower mortgage rates – or leave them unchanged. No one has any idea what the Fed will say, so I’ll avoid making a prediction for next week.
Current mortgage and refinancing rates
|program||mortgage rates||Effective interest rate*||To change|
|Conventional 30 years fixed||5,531%||5,557%||+0.02%|
|Conventional 15 year fixed||4,657%||4,686%||-0.02%|
|Conventional 20 years fixed||5,523%||5.56%||+0.01%|
|Conventional 10 year fixed||4,488%||4,546%||-0.01%|
|30 year solid FHA||5.269%||5,972%||+0.01%|
|15 year solid FHA||4,761%||5.193%||+0.13%|
|30 years solid VA||5.214%||5,431%||Unchanged|
|15 years solid VA||4.75%||5,094%||Unchanged|
|Prices are provided by our partner network and may not reflect the market. Your tariff may vary. Click here for an individual price offer. See our rate assumptions here.|
Should You Lock A Mortgage Rate Today?
I would lock in my rate the first morning when mortgage rates are expected to rise. It’s been mostly in the morning lately.
You could wait until Wednesday afternoon to lock in your rate to see if mortgage rates rise or fall in response to these critical Fed announcements (see below), which begin at 2:00 p.m. ET that day. But that’s a gamble.
On the one hand, if you wait and they’re going up sharply, you could lose. On the other hand, if you lock now and they fall, you could lose.
Personally, I’m more cautious. So my rate lock recommendations remain:
- LOCK when it closes 7 days
- LOCK when it closes 15 days
- LOCK when it closes 30 days
- LOCK when it closes 45 days
- LOCK when it closes 60 days
However, with so much uncertainty right now, your instincts could easily turn out to be just as good as mine – or better. So let your gut feeling and your personal willingness to take risks guide you.
What moves current mortgage rates
Everyone has known for weeks that the US Federal Reserve will raise its Federal Funds Rate by 0.5% next Wednesday. And the chances of it deviating from that stated intent are slim.
So you can forget about that. The markets have already priced in this rate hike.
What could make mortgage rates fall or rise that day are the Fed’s plans to reduce its holdings in mortgage-backed securities (MBSs), the type of bonds that largely drive mortgage rates. It has three main options for what to do with its $2.72 trillion stash. It could:
- Continue to use earnings from his holdings to buy new MBS, reducing his inventory very, very slowly
- Conserve the earnings from those stocks and let them dwindle a little faster
- Begin actively selling its holdings at a pace it may or may not announce
In the first case, mortgage rates could fall because the markets have already rolled out a more aggressive plan. The second option could only see minor moves as many investors expect.
But the third could drive up mortgage rates. The Fed’s additional supply in the mortgage bond market should push prices lower (supply and demand 101). And with all bonds, lower prices inevitably mean higher yields. For MBS, higher yields mean higher mortgage rates.
So keep an eye out for Wednesday afternoon media coverage of Fed announcements. It is scheduled to release a statement at 2 p.m. ET. And 30 minutes later, Fed Chair Jerome Powell will hold a press conference.
No one (probably not the Fed itself) knows for sure what will be announced next Wednesday. Personally, I think option three is more likely than many others. But I’m basing that on recent aggressive rhetoric from senior Fed officials.
And others have heard the same things and interpreted these remarks differently. So please don’t take my opinion too seriously.
Economic reports next week
By far the biggest potential impact on mortgage rates next week comes from those Wednesday Fed policy announcements. But there are a few economic reports over the next seven days that could also affect these prices.
Next week’s reports will be focused on employment and that has been excellent for the past few months. By far the most influential of these comes on Friday in the form of the official April employment report.
Possibly the most important reports below are in bold. The others are unlikely to move markets unless they contain shockingly good or bad data.
- Monday – April Institute for Supply Management (ISM) Manufacturing Index
- Tuesday — March Survey on vacancies and turnover (BACK). Plus factory orders in March
- Wednesday – Fed announcements. Also April ADP Employment Report to jobs in the private sector. And April ISM Services Index
- Thursday – Q1/22 productivity and unit labor costs. Plus weekly new applications for unemployment insurance until April 30
- Friday – April official Employment situation reportincluding Non-farm payrolls, average hourly wages and unemployment rate
Wednesday is the big day. But Friday could also be important.
Mortgage rate forecast for next week
Mortgage rates next week are essentially unpredictable. Sorry, but Wednesday’s Fed announcement is too big an unknown to stick my neck out.
Mortgage and refinancing rates usually move in tandem. And the removal of the disadvantageous market refinancing fee last year largely closed a gap that had been growing between the two.
Meanwhile, another recent regulatory change has likely made mortgages for investment properties and vacation homes more accessible and less expensive.
How your mortgage interest rate is determined
Mortgage and refinancing rates are generally determined by prices in a secondary market (similar to the stock or bond markets) in which mortgage-backed securities are traded.
And that depends heavily on the economy. So mortgage rates tend to be high when things are going well and low when the economy is in trouble.
But you play a big part in determining your own mortgage rate in five ways. And you can significantly influence it by:
- Find your best mortgage rate – it varies greatly from lender to lender
- Improving Your Credit – Even a small bump can make a big difference in your rate and payments
- Save the Biggest Down Payment – Lenders like you have real skin in this game
- Keep your other borrowings low – The lower your other monthly obligations, the higher the mortgage you can afford
- Choose Your Mortgage Carefully – Are you better off with a conventional, conforming, FHA, VA, USDA, jumbo, or other loan?
The time you spend getting those ducks in a row can result in you winning lower odds.
Remember, they’re not just a mortgage rate
Be sure to count all of your upcoming homeownership expenses when figuring out how much mortgage you can afford. So focus on your “PITI”. This is yours Principal (repays the amount borrowed), IInterest (price of borrowing), (property) TAxes and (homeowners) IInsurance. Our mortgage calculator will help you.
Depending on your mortgage type and the amount of your down payment, you may also need to pay for mortgage insurance. And that can easily get into three digits every month.
But there are other potential costs. So you will have to pay dues to the homeowners association if you choose to live anywhere with a HOA. And no matter where you live, you have to expect repair and maintenance costs. There is no landlord to call if something goes wrong!
Finally, you’ll find it hard to forget closing costs. You can see this in the Annual Percentage Rate (APR) that lenders give you. Because that effectively spreads them out over the life of your loan, making it higher than your normal mortgage rate.
But maybe you can get help with these closing costs and Your deposit, especially if it is your first time buying. Read:
Down payment assistance programs in every state for 2021
Mortgage interest methodology
The Mortgage Reports receives daily rates based on selected criteria from multiple lending partners. We get an average interest rate and APR for each loan type shown in our chart. As we average a range of rates, you’ll get a better idea of what you might find on the market. In addition, we calculate interest rates for the same types of credit. For example FHA fixed with FHA fixed. The result is a good snapshot of daily rates and how they change over time.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for the products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policies or position of Full Beaker, its officers, parent companies or affiliates.