Today’s Mortgage and Refinance Rates
Average mortgage rates rose slightly yesterday. But they ended the week significantly higher than they started it. And hopes that Wednesday’s Federal Reserve announcements would calm recent volatility have faded.
Although the Fed provided more certainty during the week, markets remain choppy. And Mortgage rates could rise next week. But, with so much in the air, this prediction is far from certain.
Current mortgage and refinance rates
|30-year fixed conventional||5.688%||5.712%||+0.03%|
|15-year fixed conventional||4.908%||4.941%||+0.06%|
|20-year fixed conventional||5.701%||5.741%||+0.03%|
|10-year fixed conventional||4.669%||4.731%||-0.02%|
|30-year fixed FHA||5.547%||6.343%||+0.02%|
|15-year fixed FHA||5.069%||5.361%||-0.02%|
|30-year fixed PV||5.305%||5.522%||+0.02%|
|15-year fixed VA||4.75%||5.094%||Unchanged|
|Pricing is provided by our partner network and may not reflect the market. Your rate may be different. Click here for a personalized quote. See our rate assumptions here.|
Should you lock in a mortgage rate today?
I would lock in my rate on the first morning when mortgage rates look likely to rise. Recently it was most mornings.
Since mid-April, we’ve had a few false dawns when mortgage rates have fallen. But, overall, the magnitude and frequency of days when rates rose was much higher. In other words, mortgage rates have been terrible for a few weeks (and months).
I keep saying this can’t go on forever and hope the rate of increases slows down. But there are few signs of that happening next week.
So my rate lock recommendations remain:
- LOCK if closing 7 days
- LOCK if closing 15 days
- LOCK if closing 30 days
- LOCK if closing 45 days
- LOCK if closing 60 days
However, with so much uncertainty right now, your instincts could easily turn out to be as good as mine, or even better. So let your instincts and personal risk tolerance guide you.
What’s Moving Current Mortgage Rates
Mortgage rates could continue to rise as long as inflation spooks the markets. Everyone was hoping that these markets would be reassured by the new anti-inflationary measures unveiled by the Federal Reserve on Wednesday. But, so far, that doesn’t seem to be the case.
There can be two main reasons for this:
- Whatever the Fed does, it will take months to start getting inflation under control
- There’s a chance the Fed measures won’t work
Most economists expect the Fed’s measures to work. But a minority question whether the pressure driving up prices has much to do with the problems the central bank is tackling.
We know that the current inflation spurt was triggered by global supply chain bottlenecks, first created by the COVID-19 lockdowns (which are still continuing in China) and now by the invasion of Ukraine by Russia. What if these remain the cause and Fed monetary policy has had little or nothing to do with it?
It’s not as eccentric as it sounds. After all, that was the Fed’s own belief until 2021.
And, if that analysis turns out to be correct, the Fed would cause borrowers a world of pain — and possibly a recession — while barely affecting inflation.
No matter the theory
But that’s just theory. In practice, this world of pain has been hitting mortgage borrowers for months. And things might not get much easier for a while.
Yesterday, former Fed Vice Chairman Richard Clarida told an audience at Stanford University that he expected the Fed’s key rate (the federal funds rate) to reach 3 .5% over the next 12 months, up from its current target range of 0.75%-1.00% . (It was 0.25% to 0.50% before the Fed hike on Wednesday). And he thought that might have to increase to 4% later in 2023.
That’s at least a sevenfold increase – a huge leap over a year. And, while the new fixed-rate mortgage rates aren’t directly affected by the federal funds rate, they certainly are.
Of course, Mr. Clarida could be wrong. And I remain optimistic that the pace at which mortgage rates have been rising will begin to slow in the coming months. But, sadly, I doubt we’ll see sustained falls for quite some time.
Economic reports next week
This week’s economic reports focused on jobs. Next week the focus will be on inflation.
The most important of these is the consumer price index, released on Wednesday. But the producer price index (Thursday) and the import price index (Friday) could also have an influence as they are indicators of future inflation.
The potentially most important reports below are highlighted in bold. The others are unlikely to move the markets much unless they contain surprisingly good or bad data.
- Monday — Consumer inflation expectations presented in the first quarter survey
- Tuesday – National Federation of Independent Business April Small Business Index
- Wednesday – Consumer price index for April.
- Thursday — April producer price index. Plus new weekly unemployment insurance claims through May 7
- Friday — April import price index. Plus the May Consumer Confidence Index
Again, Wednesday is the big day.
Mortgage interest rate forecast for next week
I suspect mortgage rates could rise next week. But that’s based on nothing more than my inability to see any reason for the current strong uptrend to end. So don’t take these weekly predictions too seriously.
Mortgage and refinance rates generally move in tandem. And the removal of unfavorable market refinancing charges last year has largely eliminated the gap that had grown 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 refinance rates are typically determined by prices in a secondary market (similar to stock or bond markets) where mortgage-backed securities are traded.
And it depends heavily on the economy. Thus, mortgage rates tend to be high when things are going well and low when the economy is struggling.
But you play an important role in determining your own mortgage rate in five ways. And you can affect it significantly by:
- Shop around for your best mortgage rate – They vary widely from lender to lender
- Boost your credit score – Even a small bump can make a big difference to your rate and payments
- Save the biggest down payment possible – Lenders like you to have real skin in this game
- Keep your other borrowings small — The lower your other monthly commitments, 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?
Time spent getting these ducks in a row can earn you lower rates.
Remember it’s not just a mortgage rate
Be sure to factor in all of your homeownership costs when calculating how much mortgage you can afford. So focus on your “PITI”. It’s your Pprincipal (repays the amount you borrowed), IInterest (the price of the loan), (the property) Jaxes, and (owners) Iassurance. Our mortgage loan calculator can help you.
Depending on your type of mortgage and the amount of your down payment, you may also need to pay for mortgage insurance. And that can easily hit three figures every month.
But there are other potential costs. So you will have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repair and maintenance costs. There is no owner to call when things go wrong!
Finally, you will have a hard time forgetting closing costs. You can see those reflected in the annual percentage rate (APR) that lenders will quote you. Because it spreads them effectively over the term of your loan, making it higher than your normal mortgage rate.
But you may be able to get help with those closing costs. and your down payment, especially if you are a first-time buyer. Lily:
Down payment assistance programs in every state for 2021
Mortgage Rate Methodology
Mortgage reports receive daily rates based on selected criteria from multiple lending partners. We arrive at an average rate and APR for each loan type to display in our chart. Because we average a range of prices, it gives you a better idea of what you might find in the market. In addition, we calculate the average of the rates for the same types of loan. For example, fixed FHA with fixed FHA. The result is a good overview of the daily rates and their development over time.
The information contained on The Mortgage Reports website is provided for informational purposes only and does not constitute advertising for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent company or affiliates.