Today’s mortgage and refinance rates
Average mortgage rates just inched higher yesterday. But that was the first increase this week. And they’re appreciably lower than they were last Friday.
So, my prediction of “barely moving” rates was wrong last week. And I must now say that mortgage rates next week are unpredictable. However, I should mention that rises are common when periods of appreciable falls peter out. But they’re not inevitable.
Current mortgage and refinance rates
|Conventional 30 year fixed||2.811%||2.811%||Unchanged|
|Conventional 15 year fixed||2.125%||2.125%||Unchanged|
|Conventional 20 year fixed||2.625%||2.625%||+0.13%|
|Conventional 10 year fixed||1.944%||1.984%||+0.01%|
|30 year fixed FHA||2.672%||3.326%||+0.06%|
|15 year fixed FHA||2.365%||2.965%||-0.07%|
|5/1 ARM FHA||2.5%||3.207%||Unchanged|
|30 year fixed VA||2.258%||2.429%||+0.01%|
|15 year fixed VA||2.25%||2.571%||Unchanged|
|5/1 ARM VA||2.5%||2.386%||Unchanged|
|Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions here.|
COVID-19 mortgage updates: Mortgage lenders are changing rates and rules due to COVID-19. To see the latest on how coronavirus could impact your home loan, click here.
Should you lock a mortgage rate today?
After a couple of good weeks for mortgage rates, you may be feeling relaxed. But don’t get too comfortable. The chances of them falling much further seem, to me, slim. While a bounce back upward looks more likely.
However, markets have been acting strangely recently. So it’s perfectly possible that you could benefit by continuing to float your rate. Just don’t complain if you get caught out by rises. And be ready to lock at any moment.
If I were you, I’d be cautious and lock now. So, my personal recommendations remain:
- LOCK if closing in 7 days
- LOCK if closing in 15 days
- LOCK if closing in 30 days
- LOCK if closing in 45 days
- LOCK if closing in 60 days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So be guided by your gut and your personal tolerance for risk.
What’s moving current mortgage rates
Well, this has been a weird week. Markets were suddenly consumed by panic on Wednesday and Thursday. It suddenly dawned on them that the COVID-19 pandemic worldwide was far from over. Maybe they’d previously had a false sense of security given that most participants have probably already been double vaccinated.
There had been a few items of economic and medical data that might have piqued their fears. But I didn’t spot any that justified such a sharp reaction. It felt more like a stampede. Like when a single horse mistakes a twig for a rattler and sets all the others racing away.
Of course, that’s not to say there aren’t still real economic dangers from the pandemic. There are. But they’ve been around for — and have changed little over — many months.
Of course, if COVID-19 does rear its ugly head again and undermine the US and global economic recoveries, mortgage rates would likely fall significantly, possibly setting new all-time lows. And stock markets would similarly plummet.
Investors would argue that they were pricing in such a possibility when they traded on Wednesday and Thursday. But why they chose those days is unclear. One theory is that it suddenly dawned on them that the post-COVID recovery may be evening off.
And it may be, now that stimulus checks have been largely spent. But new infrastructure spending is in the pipeline. And recent data, with the exception of employment numbers, have been pretty good.
Fed still the big threat to mortgage rates
While markets were escaping their (we hope) twig, they were too preoccupied to take account of some important developments from the Federal Reserve. On Wednesday, the Fed released the latest minutes of its key policymaking committee. And they showed it beginning to move to a point where it might gradually slow (“taper”) its purchases of assets.
That was confirmed in an interview yesterday in The Financial Times in which Federal Reserve Bank of San Francisco President Mary Daly said, “We’re ready to taper at the appropriate time.”
The problem is, those asset purchases include $40 billion a month spent on mortgage-backed securities. And that spree is keeping mortgage rates artificially low.
Worse, if what happened the last time the Fed announced a taper (in 2013) recurs, we could be seeing mortgage rates averaging roughly 3.5% very soon after such an announcement. At the moment, they’re hovering around the 2.9%-3% range
Economic reports next week
Next week is a heavy one for important economic reports, all of which are for June unless other wise stated. Inflation is currently one of markets’ big obsessions. And the consumer price index (CPI) is out on Tuesday, including core CPI, which is the CPI with volatile food and energy prices stripped out. Wednesday sees the release of the producer price index and Thursday the import price index.
Thursday also brings industrial production and Friday retail sales. And those might help markets to decide whether they’ve been spooked by a twig or a rattler.
None of the other economic reports listed below is likely to cause much movement in markets unless it includes shockingly good or bad data. Moreover, regular readers will know that investors have been ignoring most economic reports in recent months. So the effects of the following may be different from usual:
- Tuesday — June consumer price index and core CPI
- Wednesday — June producer price index
- Thursday — June import price index. And June industrial production with capacity utilization. Plus weekly new claims for unemployment insurance to July 10
- Friday — June retail sales and retail sales excluding autos. Plus July consumer sentiment index
After Monday, there’s something potentially important on every day next week.
Mortgage interest rates forecast for next week
I’m back to my old cop-out that mortgage rates are essentially unpredictable next week. If you forced me to lay a bet, I’d wager one cent on their rising modestly. But, honestly, little would surprise me after last week.
Mortgage and refinance rates usually move in tandem. But note that refinance rates are currently a little higher than those for purchase mortgages. That gap’s likely to remain fairly constant as they change.
Meanwhile, a recent regulatory change has made most mortgages for investment properties and vacation homes more expensive.
How your mortgage interest rate is determined
Mortgage and refinance rates are generally determined by prices in a secondary market (similar to the stock or bond markets) where mortgage-backed securities are traded.
And that’s highly dependent on the economy. So mortgage rates tend to be high when things are going well and low when the economy’s in trouble.
But you play a big part in determining your own mortgage rate in five ways. You can affect it significantly by:
- Shopping around for your best mortgage rate — They vary widely from lender to lender
- Boosting your credit score — Even a small bump can make a big difference to your rate and payments
- Saving the biggest down payment you can — Lenders like you to have real skin in this game
- Keeping your other borrowing modest — The lower your other monthly commitments, the bigger the mortgage you can afford
- Choosing your mortgage carefully — Are you better off with a conventional, FHA, VA, USDA, jumbo or another loan?
Time spent getting these ducks in a row can see you winning lower rates.
Remember, it’s not just a mortgage rate
Be sure to count all your forthcoming homeownership costs when you’re working out how big a mortgage you can afford. So focus on your “PITI” That’s your Principal (pays down the amount you borrowed), Interest (the price of borrowing), (property) Taxes, and (homeowners) Insurance. Our mortgage calculator can help with these.
Depending on your type of mortgage and the size of your down payment, you may have to pay mortgage insurance, too. And that can easily run into three figures every month.
But there are other potential costs. So you’ll have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repairs and maintenance costs. There’s no landlord to call when things go wrong!
Finally, you’ll find it hard to forget closing costs. You can see those reflected in the annual percentage rate (APR) you’ll be quoted. Because that effectively spreads them out over your loan’s term, making that higher than your straight mortgage rate.
But you may be able to get help with those closing costs and your down payment, especially if you’re a first-time buyer. Read:
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.
Mortgage Rates Today, July 10, & Rate Forecast For Next Week is written by Peter Warden for themortgagereports.com