Today’s Mortgage and Refinance Rates

Average mortgage rates edged down or held steady yesterday (Friday). Sadly, that was the only glimmer of a dark week that saw increases – including a strong one – every other day.

At this time, there does not appear to be an end to these rate increases. Of course, we’re almost bound to see an occasional drop, because that’s how the markets work. But a sustained downward movement seems unlikely, and I expect that mortgage rates will continue to rise next week. Read on for more details.

Program Mortgage rate APR* Switch
Conventional 30 years fixed 3.062% 3.065% -0.13%
Conventional 15 years fixed 2,587% 2,596% -0.11%
Conventional 20 years fixed 2.875% 2.882% -0.13%
Conventional 10 years fixed 2.474% 2.493% -0.13%
30-year fixed FHA 2.87% 3,549% -0.1%
15 years fixed FHA 2,539% 3,121% -0.16%
5 years ARM FHA 2.5% 3.213% -0.03%
Fixed VA over 30 years 2,383% 2,555% -0.36%
VA fixed 15 years 2.25% 2,571% Unchanged
5 years ARM VA 2.5% 2,392% Unchanged
Prices are provided by our network of partners and may not reflect the market. Your rate may be different. Click here for a personalized quote. See our pricing assumptions here.


COVID-19 Mortgage Updates: Mortgage lenders change rates and rules due to COVID-19. To see the latest news on the impact of the coronavirus on your home loan, Click here.

Should you lock in a mortgage rate today?

If I was still afloat I would lock in my rate right away. Of course, there is always the possibility of lower rates. But that currently looks slim. And the chances of further increases appear to be much higher. Read on to find out why.

My recommendations therefore remain:

  • LOCK if the closure 7 days
  • LOCK if the closure 15 days
  • LOCK if the closure 30 days
  • LOCK if the closure 45 days
  • LOCK if the closure 60 days

However, with so many uncertainties right now, your instincts could easily turn out to be as good as mine, if not better. So let your instincts and your personal risk tolerance guide you.

What changes current mortgage rates

The forces driving rates are the same as we reported last week. The vaccination schedule and falling COVID-19 infection rates point to an earlier-than-expected economic recovery. Indeed, we are already seeing better economic data. And a better economy comes with higher rates.

But what we listed last week as a secondary factor may have become the primary factor. And that’s the fear of future inflation.

Unfortunately, these fears also tend to drive up mortgage rates.

Fear of inflation

And you can see why. Imagine you are an investor buying a mortgage bond (a mortgage backed security or MBS) with a fixed rate of 3% for 30 years. This means that your return (income) is also fixed.

And now imagine how sick you would feel if next year (or 10 years from now) severe inflation set in, and you suddenly saw inflation and interest rates skyrocket to 10 % or even more – while you still got 3%. .

It is not an impossible fiction. Between 1978 and 1990, the average rate on a 30-year fixed-rate mortgage never fell below 10%, measured annually. And, in October 1982, that rate peaked at 18.45%, according to Freddie Mac records.

It’s not hard to imagine how petrified investors are about having their money tied up in fixed rate securities if there is a likelihood of future inflation.

Still a low possibility of falls

Of course, nothing is certain in the markets. And some dire news could come out of nowhere and kill both the optimism and the fear of inflation that comes with it.

Indeed, earlier this week, the New York Times reported on a new variant of SARS-CoV-2 (the virus that causes COVID-19) that is currently circulating in New York City. And some scientists fear it may be more resistant to current vaccines than existing strains.

This research has not yet been peer reviewed. And it may be nothing. But it’s an example of the kind of news that could turn the markets and mortgage rates around. The problem is, the chances of such an event happening before your closing date don’t seem high.

Economic reports next week

Next Friday brings the official monthly report on the employment situation. And that’s arguably the most important economic data of all right now. The markets can therefore be affected by these figures

They are less likely to be affected by other intercourse this week. However, any data can have an impact if it differs significantly from expectations.

Here are the main economic reports for next week:

  • Monday – January construction expenses. Also February auto sales. Plus the Institute for Supply Management (ISM) February manufacturing index
  • Wednesday – February ISM Services Index
  • Thursday – New weekly unemployment insurance claims.
  • Friday – Report on the employment situation in February, including non-farm wages and the unemployment rate.

Also beware of speeches by senior Federal Reserve officers. The Fed is currently walking a fine line between keeping the recovery on track and not fueling inflationary fears. Investors are therefore very attentive to their words.

Mortgage interest rate forecasts for next week

Unfortunately, I can only predict a rate hike this week. The pace of increases may slow down and we may even see occasional small declines. But, overall, it’s hard to imagine that the recent trend is reversing.

Mortgage and refinancing rates generally move in tandem. But be aware that refinancing rates are currently a little higher than those for purchase mortgages. This spread is likely to remain constant as they change.

How your mortgage interest rate is determined

Mortgage and refinancing rates are generally 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. Mortgage rates therefore tend to be high when things are going well and low when the economy is struggling.

Your part

But you play an important role in determining your own mortgage rate in five ways. You can significantly affect it by:

  1. Find Your Best Mortgage Rate – They Vary Dramatically From Lender to Lender
  2. Increase Your Credit Score – Even a Small Bump Can Make a Big Difference in Your Rate and Payments
  3. Save the Biggest Down Payment Possible – Lenders love you to have real skin in this game
  4. Keep your other loans small – The lower your other monthly commitments, the larger the mortgage you can afford
  5. Choosing the Right Mortgage – Are you better off with a conventional, FHA, VA, USDA, jumbo or other loan?

The time spent getting those ducks in a row can earn you lower rates.

Remember, it’s not just a mortgage rate

Be sure to count all of your upcoming homeownership costs when determining how much mortgage you can afford. So focus on your “PITI” This is your Pmain (reimburses the amount you borrowed), Iinterest (the loan price), (property) Taxes, and (owners) Iassurance. Our mortgage calculator can help with these.

Depending on your mortgage type and the amount of your down payment, you may also need to pay for mortgage default insurance. And that can easily reach three digits each month.

But there are other potential costs. You will therefore 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 in case of a problem!

Finally, you will have a hard time forgetting the closing costs. You can see which are reflected in the Annual Percentage Rate (APR) that will be shown to you. Because it effectively spreads them out over the life 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. Read:

Down payment assistance programs in each state for 2020

Mortgage rate methodology

Mortgage reports receive rates based on selected criteria from several lending partners every day. We arrive at an average rate and an APR for each type of loan to display in our graph. Because we average a range of rates, it gives you a better idea of ​​what you might find in the market. In addition, we average the rates for the same types of loans. For example, fixed FHA with fixed FHA. The end result is a good overview of the daily rates and how they have changed over time.

The information contained on The Mortgage Reports website is provided for informational purposes only and does not constitute an advertisement for any 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, its parent company or its affiliates.


Source link