Today's mortgage and refinance rates
Average mortgage rates ended just off their all-time low on Thursday (and year).
We have got used to the fact that the courses have barely moved in the past few weeks. But that could change soon. And it is possible that we will see more volatility in the coming week. Read on to find out why things might be different soon.
Find and Lock a Low Rate (Jan 2, 2021)
Conventional 30 years fixed
Conventional 15 years fixed
Conventional 5-year ARM
Fixed FTA for 30 years
Fixed FTA for 15 years
5 years ARM FHA
30 years permanent VA
15 years fixed VA
5 years ARM VA
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Find and Lock a Low Rate (Jan 2, 2021)
COVID-19 Mortgage Updates: Mortgage lenders are changing interest rates and rules due to COVID-19. For the latest information on the impact of Coronavirus on your home loan, click here.
Should You Lock A Mortgage Rate Today?
Next week brings more low mortgage rate threats than we saw recently. Of course, this does not mean that we will necessarily encounter greater volatility. After all, the past few weeks have brought events that would normally have postponed these rates but left them unchanged. But it does mean it is more likely.
Read the following section about the risks the next week brings.
But right now my personal recommendations are:
LOCK when you approach 7th DaysLOCK when you approach 15th DaysLOCK when you approach 30th DaysHOVER when you approach 45 DaysHOVER when you approach 60 Days
With so much uncertainty right now, however, your instincts could easily prove to be as good as mine – or better. So let your gut and your personal risk tolerance guide you.
What is driving current mortgage rates?
Why do I think there might be more volatility next week? Well there are two main reasons.
1. The drains of the Senate
The most likely causes of higher rates are Senate outflows in Georgia on Tuesday. If both Democratic candidates win (and FiveThirtyEight is proposing today that they each have a very small head start), control of the U.S. Senate will pass to their party.
That would give the Democrats a clean view of the White House and both Houses of Congress. And would almost certainly mean much more generous pandemic relief programs.
Investors would like this prospect. And both government bond yields and mortgage rates could well go up. How big a rise would be or how long it would take is everyone's bet.
As with the presidential election, it can take days or more to call the runoff. And during this time the prices may be affected by upcoming messages about the progress of the count.
Should you take any chance of a GOP victory (it only takes one seat to maintain control of the Senate) by floating further? That depends on how sharp you are as a gamer.
2. Employment data
The other possible impact on next week's mortgage rates is employment data. The monthly report on the employment situation appears on Friday. And in the current circumstances, many economists consider it the most important of all economic reports.
If the numbers are better than expected, mortgage rates could rise. But worse ones could put these interest rates under pressure.
I still think mortgage rates are likely to fall in the first half of 2021. And the reason is the pandemic.
Yes, newly reported cases and deaths have decreased during the holiday season. However, this is likely in part due to disrupted reporting processes. According to the New York Times, hospital stays rose 10% in the two weeks leading up to New Year's Eve.
Worse still, ill-advised social blending on vacation is likely to lead to new cases. The picture, until the vaccines have a serious impact, likely won't be pretty.
And the administration of vaccines is already facing logistical problems. Federal officials had set a goal of 20 million vaccinations by the end of 2020. However, the actual number was 2.8 million.
Of course, some of the teething troubles will be resolved. However, some serious experts believe things won't return to normal until the third or even fourth quarter of this year. In the meantime, the economic damage caused by the pandemic will mount.
And of course, mortgage rates tend to be lower during difficult economic times. So I suspect we will have a few more months of low rates. But January may not be one of them.
Economic reports next week
This week's big reports will likely be those on employment. However, others may have an impact (all referring to December unless otherwise noted):
Monday – November Construction Spending Tuesday – Institute of Supply Management (ISM) Production Index Wednesday – ADP Employment Report. Plus November Factory Orders Thursday – Weekly New Unemployment Insurance Claims. Plus ISM Services Index Friday – Employment Report
The minutes of the last meeting of the Federal Reserve's political body (the Federal Open Market Committee) will also be released on Wednesday. Investors will ponder this for further insight into member expectations for the economy and policy options. And there's a chance what they collect will go towards mortgage interest.
Find and Lock a Low Rate (Jan 2, 2021)
Mortgage rates forecast for next week
This week could make mortgage rates more volatile. It is not guaranteed. But it wouldn't be a surprise.
Mortgage and refinance rates usually move together. Note, however, that refinancing rates are currently slightly higher than those for purchase mortgages. This gap is likely to remain constant as it changes.
How is your mortgage rate determined?
Mortgage and refinancing rates are generally determined by the prices on a secondary market (similar to the stock or bond markets) where mortgage-backed securities are traded.
And that depends a lot on the economy. Therefore, mortgage rates are typically high when things are going well and low when the economy is in trouble.
However, they play a huge role in determining your own mortgage rate in five ways. You can significantly affect it by:
Shopping for Your Best Mortgage Rate – They vary widely from lender to lender. Boost your credit score. – Even a small bump can make a huge difference to your interest rate and payments. Save the biggest deposit you can. – Lenders want you to have real skin in this game of your other modest borrowings – The lower your other monthly commitments, the higher the mortgage you can afford. Choose your mortgage carefully. – Are you better off with a conventional, FHA, VA, USDA, Jumbo, or any other loan?
If you spend these ducks in a row you can win lower rates.
Remember, it's not just a mortgage rate
Take into account all of your upcoming home ownership costs when figuring out what your mortgage can be. So concentrate on your "PITI" P.rincipal (pays out the borrowed amount), Interest (the price of borrowing), (property) T.Axes and (homeowners) IInsurance. Our mortgage calculator can help you with this.
Depending on your type of mortgage and the amount of your down payment, you may also need to purchase mortgage insurance. And that can easily reach three digits every month.
But there are other potential costs. So you have to pay the homeowners association membership fees if you want to live anywhere with an HOA. And wherever you live, you should expect repair and maintenance costs. There is no landlord who can call if something goes wrong!
After all, you find it hard to forget about closing costs. You can see this in the Annual Percentage (APR) you provide. Because this effectively spreads it out over the life of your loan and makes it higher than your direct mortgage rate.
However, you may be able to get help with these closing costs and your down payment, especially if you are a first time buyer. Read:
Programs to support advance payments in all federal states for 2020
Mortgage rate method
The mortgage reports receive interest rates based on selected criteria from multiple credit partners on a daily basis. We find an average rate and an annual interest rate for each type of loan that we want to show on our chart. Since we calculate a series of average prices, this will give you a better idea of what you might find in the market. We also calculate average interest rates for the same types of loans. For example, FHA was fixed with FHA. The end result is a good snapshot of the daily rates and how they change over time.