Today's mortgage and refinance rates
Average mortgage rates rose again yesterday. So you ended the week much higher than at the beginning. Even after that bad time, they are still in what is considered ultra-low.
However, if last week's trend continues for a long time, it will no longer be the case. So will it? Nobody can be sure. However, the risk is very real. And I wouldn't bet years of higher payments when the likely winnings are so low.
In order to I would lock my plan as soon as possible, certainly if I closed in the next 30 days. Read on for details.
Find and Lock a Low Rate (Jan 10, 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
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 (Jan 10, 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?
If I waited to close, I would Lock now. But of course I'm careful. And if you're more familiar with risks than I am, then you can wait and see how things play out, especially if you don't have to close for about a month.
Before you decide, read the next section which explains what is going on. 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?
We are facing a conflict between two opposing forces. On the one hand, the new administration – largely unreservedly by Congress – is likely to spend and borrow more money than the previous one. And that is very likely to put upward pressure on government bond yields and mortgage rates.
On the flip side, however, the economy is facing many months in which the pandemic, which is now raging at record levels, will cause ongoing economic damage. And that should put pressure on mortgage rates.
But nobody knows which of these forces will be more influential. And just because the former won last week doesn't mean he'll keep on doing so.
More than ever, there are no right or wrong answers about when to lock. And your risk tolerance could rightly be the basis for your decision.
The new government is planning far more generous pandemic aid, especially for poor people and small businesses. Long-term spending on an infrastructure program as well as improved health care, a universal pre-K, non-teaching community college classes and clean energy initiatives are planned.
Do not think that the Democratic Party's control of the US Senate will make all of this expenditure a given. Because many laws require a 60-40 majority to pass. And with a wafer-thin advantage, the party can only be as left as its far-right senator. If the Republicans stay solid, losing even one vote will nullify any proposal.
Economic damage from the pandemic
Yesterday's official employment report showed for the first time since April that more jobs were lost than won in one month (December). According to Reuters, there are now "around 10 million fewer jobs than before the outbreak of the coronavirus pandemic".
And the economy is likely to suffer more pandemic hits for some time to come. Because COVID-19 is spreading faster than ever before. Overnight, the New York Times painted this picture:
In the United States, at least 3,895 new coronavirus deaths and 300,594 new cases were reported on Jan. 8. For the past week, there has been an average of 259,564 cases per day, up 40 percent from the average two weeks earlier. As of Saturday morning, more than 21,990,300 people in the United States have been infected with the coronavirus, according to a database from the New York Times.
Coronavirus in the US: Latest Card and Case Count – Updated January 9, 2021 at 1:09 a.m. E.T.
Unfortunately, other metrics were also on the up: According to the Times, the 14-day values changed by 14% for deaths and + 11% for hospital stays. COVID-19 and its economic impact will go nowhere until a large section of the population is vaccinated. And the adoption of vaccines has been painfully slow so far.
Economic reports next week
Here are the big economic reports for this week (all for December unless otherwise noted):
Wednesday – Consumer Price Index Thursday – Weekly New Unemployment Insurance Entitlements Friday – Retail Sales. Plus industrial production and the first reading of the consumer sentiment index in January
Chances are, either of these will have to be shockingly good or bad to gain visibility in the face of the larger issues outlined above.
Find and Lock a Low Rate (Jan 10, 2021)
Mortgage rates forecast for next week
This coming week is highly unpredictable for mortgage rates. I want to be more helpful. But it's just not possible right now.
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 size 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'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.