Today's mortgage and refinance rates
Average mortgage rates barely moved on Friday. And that ended a week in which they had moved up. But such a small change didn't change your life.
Yes, Next week mortgage rates remain unpredictable. However, if I had to make a forecast (and I think I should) I would expect another modest increase based only on recent momentum.
Find and lock a low rate (May 22, 2021)
Current mortgage and refinancing rates
Conventional set for 30 years
Conventional 15 years fixed
Conventional set for 20 years
Conventional 10 years fixed
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
Prices are provided by our partner network and may not reflect the market. Your rate could be different. Click here for a personalized price offer. See our tariff assumptions here.
Find and lock a low rate (May 22, 2021)
COVID-19 Mortgage Updates: Mortgage lenders are changing interest rates and rules due to COVID-19. For the latest information on how coronavirus is affecting your home loan, click here.
Should You Lock A Mortgage Rate Today?
Average mortgage rates rose again this week. And they remain near their highest level in more than a month.
I expect further increases in the coming weeks and months as the economic recovery gains momentum. If I were you, I would lock my plan now. But there are no certainties and you may prefer to follow your own instincts.
Nevertheless, my personal recommendations remain:
LOCK when you approach 7th DaysLOCK when you approach fifteen DaysLOCK when you approach 30th DaysLOCK when you approach 45 DaysLOCK 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?
Do you remember the so-called tantrum of 2013? There is no reason why you should do it unless you have been involved in it.
But it caused a sharp rise in mortgage rates. In fact, those for a 30-year fixed rate mortgage rose to 4.07% in June this year. According to the Freddie Mac archives, that was a 3.54% increase in May. And they continued to rise, ending at 4.46% in 2013 and staying above 4% through December 2014.
Now I am unable to give history lessons. But you need to know about the events of 2013 as many expect a repeat this year or next
What is a tantrum and why is it important?
A taper in this context occurs when the Federal Reserve slowly reduces its asset purchases. And the tantrum arises when the markets don't like what is happening and throw their toys out of the stroller.
After five years of buying nearly $ 2 trillion in assets, mortgage rates skyrocketed in 2013 as the Fed announced it would gradually reduce the purchase. Where from? These assets included mountains of mortgage-backed securities (MBS). So the Fed kept mortgage rates artificially low.
Right now, the Fed is buying assets again – at the rate of $ 120 billion a month. And it's probably the biggest buyer of this MBS and a huge contributor to today's low mortgage rates.
But on Wednesday, the minutes of its last political session showed that some of its leaders wanted to raise the issue of a second rejuvenation soon. So there is every reason to fear a second tantrum – and the significantly higher mortgage rates that could result.
More to fear than a tantrum
Unfortunately, even if a tantrum has somehow subsided, we're likely to see higher mortgage rates this year. Last week's weekend edition tells you how fears of future inflation and the possibility of an economic upswing are likely to drive them up anyway.
Unfortunately, nobody has a schedule for these events. We can see them coming, but we have no idea when they might arrive. And that is exactly what – and an abundance of caution – has forced me to stick with my float-or-lock recommendations lately.
Of course, there is always the possibility that some extraordinarily damaging event could stifle the recovery and force the Fed to keep buying assets. And such a disaster would likely cause mortgage rates to fall again, perhaps to new all-time lows. But there is more to fear than interest rate concerns.
Economic reports next week
Chances are, you can relax by Friday next week. Most economic reports are relatively small by then. However, any report can move markets if it contains shocking and unexpected data.
But watch out on Friday. Because that brings the April numbers for core inflation. And the markets are obsessed with it right now. Personal income and consumer spending figures are also due on that day.
However, the other impulses listed below are unlikely to race. Additionally, regular readers will know that the markets have ignored most of the economic reports for the past few weeks. Therefore, the following effects may differ from the usual ones:
Tuesday – March CoreLogic Case-Shiller National House Price Index. Plus the consumer confidence index in May and new home sales in April
Thursday – April index of main economic indicators. Long-lived goods orders for April too. Plus new claims for unemployment insurance every week
Core inflation, personal income, and consumer spending figures Friday through April. Plus the consumer sentiment index from May
So watch out for Friday.
Find and lock a low rate (May 22, 2021)
Mortgage rates forecast for next week
M.Mortgage rates could rise again a few inches this week, although they remain essentially unpredictable. And apart from the dynamics that exist, I have little to do with this prediction.
Mortgage and refinance rates usually move together. Note, however, that refinancing rates are currently slightly higher than those for purchase mortgages. This gap will likely stay pretty constant as it changes.
Meanwhile, a recent change in regulations has made most investment property and vacation home mortgages more expensive.
How is your mortgage rate determined?
Mortgage and refinancing rates are generally determined by the prices on a secondary market (similar to 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 big 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 obligations, 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 a mortgage you can afford. 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 homeowners association membership fees if you choose to live with an HOA anywhere. 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 have a hard time forgetting about closing costs. You can see this in the Annual Percentage (APR) that you will 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 this is your first time buyer. Read:
Down payment assistance programs in each state for 2021
Mortgage rate method
The mortgage reports receive interest rates based on selected criteria from multiple credit partners on a daily basis. We'll 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.