Today's mortgage and refinancing rates
Average mortgage rates rose only slightly yesterday. But that was enough to bring it to its highest level since April.
The good news is that these rates remain exceptionally low by almost all standards. Over the past 50 years they have only been lower than last night for a few months, all since August 2021, according to the Freddie Mac archives.
Yesterday's disappointing job report means they'll be rising more slowly for a while. but I suspect they will go even higher next week. The bond markets will be closed on Columbus Day next Monday. So we'll be back on Tuesday.
Find and lock a cheap rate (October 9, 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 9, 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?
If I were you, I would fix my mortgage rate now. Of course, nobody can see into the future. And I could be wrong.
But the forces trying to push these rates up seem to me to be much stronger than those trying to pull them down. More on this below.
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?
For the whole of last week I have been working on yesterday's employment report. The Federal Reserve had signaled that it would “rejuvenate” its cheap money (aka “quantitative easing”) policy from November 3rd – unless that report was really terrible.
And that policy was probably the single biggest factor that kept mortgage rates artificially low for the past 18 months. You might think it is very likely that these rates will rise once the Fed begins to pull back on support. In fact, most of the recent hikes are likely largely due to the Fed's signal that it will.
So the question now is: Was the job report so bad that the Fed is delaying its November 3 throttling announcement by maybe six weeks or more? Unfortunately, this is a verdict. And observers disagree on the impact.
Yesterday, the Wall Street Journal (Paywall) ran the headline after the report: "Jobs Report Keeps Fed Taper On Track For November". And Reuters agreed:
The Federal Reserve could begin scaling back its support to the economy next month, although job growth slowed sharply last month as the recent surge in COVID-19 cases in the US peaked and declined.
– Reuters, "Fed is approaching November bond taper according to job report," October 8, 2021
Others, including Barron’s and Investors.com, are less sure, however, suggesting that a delay in tapering was still firmly in sight.
The bond markets (one of which largely drives mortgage rates), however, voted with their feet, with 10-year government bond yields – and mortgage rates – higher at the end of the day than they were at the beginning.
Other forces are driving up mortgage rates
Unfortunately, even if the Fed delays the throttling, I doubt that mortgage rates will fall sharply and sustainably. Another driver for lower interest rates seems to be evaporating, at least for the time being.
The COVID-19 pandemic was clearly what caused the lower mortgage rates. In fact, it was what forced the Fed to adopt its cheap money policy.
And the number of new infections reported in America has been falling significantly since mid-September. Investors who have long feared the economic consequences of the pandemic are suddenly in a sunnier mood. And that's bad for mortgage rates.
Meanwhile, other factors that oppose low interest rates are gaining ground. For example, higher inflation is proving to be much more persistent than many expected. And that's never good news for borrowing costs.
Of course, it is always possible that something will come that will change everything. For example, a new, virulent, virus-resistant strain of SARS-CoV 2 (the virus that causes COVID-19) could emerge and reverse the current direction of the economy and mortgage rates. But let's hope this and any other disaster of similar magnitude remains unlikely.
Economic reports next week
If this week was all about employment, next week it's mostly about inflation. And these are the two top topics for investors at the moment.
If next week's numbers show that inflation continues or rises, expect more upward pressure on mortgage rates. But watch out for another important report: September retail sales. Investors are likely to see this as an indicator of the strength of the economic recovery.
The minutes of the last meeting of the Federal Reserve's Open Market Committee (FOMC), the Fed's main monetary policy body, will be released on Wednesday. Investors are always brooding over it. But with those minutes, they'll be looking for more clues about when to taper.
None of the other economic reports listed below are likely to cause much movement in the markets unless they include shockingly good or bad data:
Monday – Columbus Day – No Reports Tuesday – August Vacancies Wednesday – September Consumer Price Index (CPI) and Core CPI (CPI excluding volatile food and energy prices). Plus publication of the FOMC protocol (see above) Thursday – September Producer Price Index. And weekly new applications for unemployment insurance until October 9th. Friday – September retail sales and import price index. Plus October consumer sentiment index
Attention Wednesday and Friday!
Find and lock a cheap rate (October 9, 2021)
Mortgage rates forecast for next week
Overall, I expect Mortgage rates are set to rise again next week. But with so much uncertainty, of course, that's an educated guess at best.
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 regulatory change announced this week likely made investment property and vacation home mortgages more accessible and affordable.
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 daily interest rates based on selected criteria from multiple credit partners. 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, this 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. Example: FHA fixed with FHA fixed. The result is a good snapshot of the daily rates and how they change over time.