Today's mortgage and refinancing rates
Average mortgage rates rose again yesterday. Of course, these remain exceptionally low by almost all historical standards. But it has been going up for months.
And I guess so Mortgage rates could rise again next week. Because the forces that drove you up (see below) remain strong. And the momentum still seems strong. Falls are inevitable, however, and I can't rule one out for the next seven days.
Find and lock a cheap rate (October 23, 2021)
Current mortgage and refinancing rates
Effective interest rate*
Conventional 30 years
Conventionally fixed for 15 years
Conventional 20 years old
Conventionally fixed for 10 years
30 years permanent FHA
Fixed FTA for 15 years
5/1 ARM FHA
30 years of permanent VA
15 years fixed VA
Prices are provided by our partner network and may not reflect the market. Your rate can be different. Click here for an individual price offer. View our rate assumptions here.
Find and lock a cheap rate (October 23, 2021)
COVID-19 Mortgage Updates: Mortgage lenders are changing interest rates and rules due to COVID-19. Click here to learn how the coronavirus could affect your home loan.
Should You Lock A Mortgage Rate Today?
All mortgage rates have been rising for several weeks. And for the most popular types of credit, the tipping point was August 4th, with rally sharper since September 15th.
Of course, the Freddie Mac chart from which this information was drawn shows some falls since that data. But only short and flat. And you have to return by April 7th to see rates higher than the current ones.
So yes. If I were you I would lock my tariff today. Because unfortunately there are hardly any signs that the upward trend will end anytime soon.
Read on to discover the drivers that are driving these rates up. And why they won't go away anytime soon.
In any case, my personal recommendations remain:
LOCK when close in 7th DaysLOCK when close in fifteen DaysLOCK when close in 30th DaysLOCK when close in 45 DaysLOCK when close in 60 Days
With so much uncertainty right now, however, your instincts could turn out to be as good as mine – or better. So let your gut instinct and your personal risk tolerance guide you.
What is driving current mortgage rates?
What forces are currently driving up mortgage rates? They are the same as the three who have been doing this for several weeks. So if you are a regular reader and know these by heart, you can skip this section.
Still reading? Well these powers are:
1. The Federal Reserve's Imminent Actions
Pretty much everyone expects the Federal Reserve to announce on November 3rd that it will be scaling back (shortening) its “quantitative easing” (cheap money) programs. If so, the process will begin in mid-November and complete the programs by mid-2022.
What does this have to do with mortgage rates? One of those programs resulted in the Fed spending $ 40 billion every month on one type of bond: a mortgage-backed security (MBS) for the past 19 months. And these MBS are the main determinant of mortgage rates.
In other words, the Fed has kept mortgage rates artificially low since the onset of the pandemic. It is clear that if she stops, mortgage rates are likely to go up.
In fact, they are likely already a direct result of investors anticipating the Fed's widely signaled intentions. So some of the rallies over the past few weeks are likely due to investors positioning themselves for the announcement.
Investors in bonds (including MBS) are very sensitive to inflation. You buy a steady income over a period of time. And if inflation is higher – as it is now – than the rate of return ("Return") they can earn, they will lose money.
Unsurprisingly, they shy away from borrowing at times like these. And that lowers the price and increases the yields on those bonds. When applied to MBSs, it drives up mortgage rates.
Many thought that the current inflation rate was going to fall by now. However, the latest consumer price index (CPI) showed that prices were up 5.4% yoy. And there is little evidence of any short-term easing.
So inflation is putting real upward pressure on mortgage rates.
3. Falling COVID-19 infection rates
The New York Times (Paywall) is one of several newspapers tracking data on the pandemic. And on September 13th, the most recent high of new daily reported cases of COVID-19 was reported: 285,058.
But new cases have been falling ever since. By yesterday that number had dropped to 87,344.
Of course, the pandemic is the underlying cause of both the Fed's quantitative easing program and higher inflation. But investors' fear of it also helped keep mortgage rates low. And as the threat subsides, that too increases upward pressure on mortgage rates.
Nothing is impossible
Of course, it is always possible that something big could happen that is so terrible that it overwhelms the markets and drives mortgage rates down again. But it should be something meaningful.
A new, highly virulent, vaccine-resistant strain of SARS-CoV-2 (the virus that causes COVID-19) could do this. As well as a serious shooting war between the US and China, maybe for Taiwan. Or a 1929-style stock market collapse.
But without an event like this, the higher mortgage rates seem to be permanent for now.
Economic reports next week
The first reading (of three increasingly accurate) gross domestic product in the third quarter of 2021 next Thursday will be carefully watched. And there's a ton of inflation, income, and spending data due the next day. Meanwhile, consumer confidence and sentiment measurements are planned for next Tuesday and Friday.
But none of the other economic reports listed below are likely to cause much movement in the markets unless it includes shockingly good or bad data:
Tuesday – October Consumer Confidence Index and August S&P Case-Shiller House Price Index. Plus New Home Sales in SeptemberWednesday – September Orders of Durable Goods and Core Investments in Capital GoodsThursday – Gross Domestic Product (GDP) 3rd Quarter 2021 (Forecast). Plus weekly new applications for unemployment insurance until October 23, Friday – September Core inflation; nominal personal income; real disposable income; nominal consumer spending; real consumer spending. Plus October consumer sentiment index
Some reports next week could move the markets.
Find and lock a cheap rate (October 23, 2021)
Mortgage rates forecast for next week
Unfortunately, I suspect that Mortgage rates could rise again next week. But we will likely be making a small drop as an adjustment soon. And it's always possible that this could happen in the next seven days. Just be aware that I think that overall higher mortgage rates are more than likely in the coming weeks.
Mortgage and refinancing rates usually move in parallel. And a gap that had grown between the two was largely closed with the recent abolition of the disadvantageous market refinancing fee.
And another recent regulatory change has likely made investment property and vacation rental mortgages more accessible and less expensive.
This is how your mortgage rate is determined
Mortgage and refinance rates are generally determined by prices on a secondary market (similar to the stock or bond markets) where mortgage-backed securities are traded.
And that depends heavily on the economy. So mortgage rates are typically high when things are going well and low when the economy is in trouble.
But you play a huge role in determining your own mortgage rate in five ways. And you can significantly affect it by:
Rummage For Your Best Mortgage Rate – They Vary A Lot From Lender To Lender Improve Your Credit Score – Even A Small Boost Can Make A Big Difference To Your Interest Rate And Payments Save The Biggest Down Payment You Can – Lenders Like You To Be Real In This Game Keeping Your Other Borrowings Modest – 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 Other Loan?
The time you spend getting these ducks in a row can result in you winning lower prizes.
Remember, it's not just a mortgage rate
Remember to count all of the upcoming home ownership costs when figuring out how much a mortgage you can afford. So concentrate on your "PITI". This is yours P.rincipal (pays back the amount borrowed), IInterest (the price of borrowing), (property) TAxles and (homeowners) IInsurance. Our mortgage calculator will help you with this.
Depending on your mortgage type and the amount of your down payment, you may also need to pay for mortgage insurance. And that can easily reach three digits every month.
But there are other potential costs as well. So you have to pay community contributions if you choose to live with an HOA. And wherever you live, you have to expect repair and maintenance costs. There is no landlord to call if something goes wrong!
After all, it's hard to forget about closing costs. You can see this in the specified annual percentage rate (APR). Because this effectively spreads it over the term of your loan and is thus higher than your pure mortgage interest.
But you may be able to get help with these closing costs and your down payment, especially if you are a first-time buyer. Read:
Down payment assistance programs in each state for 2021
Mortgage rate methodology
The mortgage reports receive interest rates based on selected criteria from multiple credit partners on a daily basis. We'll find an average interest rate and an APR for each type of loan shown on our chart. Since we average a range of prices, it will give you a better idea of what you might find in the market. In addition, we determine average interest rates for the same types of credit. For example FHA fixed with FHA fixed. The result is a good snapshot of the daily rates and how they change over time.