Today's mortgage and refinance rates
Average mortgage rates rose yesterday. And the week that had hit a new all-time low, promising, went nowhere. Because those averages were the same last night as they were seven days ago.
Right now, I don't expect any strong mortgage rates. It's not impossible, but I can't see any obvious reasons for it. So you are unlikely to lose or gain much whether you upgrade or lock your course
Personally, I don't see any point in betting when the rewards of winning are likely that low. And I locked my plan when I was 30 days after graduation. But you could quite rationally take the opposite position.
Find and Lock a Low Rate (Jan 30, 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 30, 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?
Mortgage rates have shown a clear downward trend over the past few months. Looking back over January, the increases and decreases in both the frequency and size of the movements were almost the same.
In fact, these averages end the month almost exactly where they started. And the area in which they moved was also narrow.
Assuming this situation lasts until next week (and I see no reason to believe it doesn't), you are likely to win or lose little if you either lock or hover.
So my recommendation Lock if you close within 30 days of closing is based on an abundance of caution. Why take even the small chance that something big suddenly pops up and messes things up when the rewards of swimming are likely so limited?
LOCK when you approach 7th DaysLOCK when you approach fifteen 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?
There have been moments in the past week when I feared I misunderstood the situation. Could investors have chosen to ignore the prospect of more government borrowing so mortgage rates can resume their long march in line with the deteriorating economy?
But no. The Thursday and Friday hikes indicated that these investors continued to have concerns that these rates were consistently driving up those rates in January.
However, those concerns are fairly evenly offset by others about the serious damage the pandemic continues to do to the economy. These are trying to lower mortgage rates as the prospect of higher government bonds tries to raise them.
By January these competing forces were fairly evenly attuned to one another. And I expect them to stay that way this week. Be aware, however, that they are likely to grow and lose prominence in the minds of investors as news takes center stage at different times. And that could lead to more volatility.
A break with government bonds
It is worth mentioning a phenomenon that has been around for a while. Traditionally, mortgage rates weigh on 10-year government bond yields. It's never been a perfect relationship, but it's been a pretty reliable constant for a very long time.
Until it wasn't. Towards the end of 2020 we saw an unusual pause that some consider dangerous. There is always a difference ("spread") between the two, as Treasury securities are much safer investments than mortgage-backed securities. But this spread has grown unusually large in recent months.
And should it snap back, there could be a chance of noticeably higher rates with very little warning. Of course, that can't happen. Or at least not soon or soon. However, it's another reason to play it safe when deciding whether to float or lock your course.
Economic reports next week
Next Friday, the December employment report, which many consider to be the most important of all economic reports, will be released next Friday. Markets and mortgage rates can move if the data is better or worse than expected.
Next week's other reports will likely have to be shockingly good or bad to move those rates far.
Here are next week's key economic reports:
Monday – December Construction Spending Tuesday – January ISM Index (Institute for Supply Management) reading Wednesday – January ISM Services Index reading Thursday – Weekly New Unemployment Insurance Claims. Report on the employment situation from Friday to December, including non-farm payroll and unemployment rate
Friday is the big day of next week.
Find and Lock a Low Rate (Jan 30, 2021)
Mortgage rates forecast for next week
Last week we said we would keep our fingers crossed for another all-time low. And that went well. But only briefly.
Another week can see. However, further increases are roughly equally likely.
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 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.