Today's mortgage and refinancing rates
Average mortgage rates were stable yesterday. And the same goes for the week. They fell by an almost imperceptible amount in those five working days.
And maybe we'll have more of it. because Mortgage rates next week seem likely to drift up and down with no apparent direction. It is possible, however, that that could change on Friday, which brings some key economic data and a keynote address from the Federal Reserve Chairman.
Find and lock a cheap rate (August 21, 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 (August 21, 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?
The risks of continuing to dump your interest rate seem a little less scary than they were at this time last week. But they're still there.
Personally, I would lock my rate no matter when I should close. But I am extremely careful. And you might (or might not) make profits by continuing to float, although they probably won't be big. Locking or floating in the moment has more to do with your risk tolerance than trends or forecasts, all of which are uncertain.
In order to do justice to everyone, my personal recommendations remain:
LOCK when close in 7th DaysLOCK when close in fifteen DaysLOCK when close in 30th DaysHOVER when close in 45 DaysHOVER 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?
Not much moves current mortgage rates. Because they were pretty flat this week. Read on to find out why next Friday might change – but probably not.
Are rates less likely to rise?
On Thursday, both Fannie Mae and the Mortgage Bankers Association (MBA) updated their rate forecasts for 30-year fixed-rate mortgages (FRMs). And both reined in their rather pessimistic predictions. Take a look at the two tables below to see the differences in each team's forecast between this month and last month. "Q" stands for quarter. For example, the fourth quarter of 2021 is the last three months of this year.
Fannie had by far the sunnier prospect. And his business team expects:
periodAug. prognosisJuly forecastCurrent Quarter 2.8% 3% Q4 20 212.9% 3.1% Q1 20 223% 3.2% Q2 20 223% 3.2% Average 20 212.9% 3% Average 20 223.1% 3.2% Fannie Mae interest rate forecasts in July and August 2021 – for 30-year-old FRMs
So if Fannie turns out to be right, we'll keep mortgage rates down for at least another 16 months.
However, the forecasts of the MBA are very different. And even less optimistic:
periodAug. prognosisJuly forecastCurrent quarter 2.9% 3.2% Q4 20 213.3% 3.4% Q1 20 223.5% 3.8% Q2 20 223.7% 4% average 20 213.3% 3.4% average 20 224.2% 4 .3% MBA Rate Predictions in July and August 2021 – for 30-year-old FRMs
The MBA boldly predicts an average for these rates for 2023. And he reckons with 4.8%.
Shouldn't you believe anyone?
These are two teams of highly skilled economists whose members spend their professional lives studying mortgage rates and related fields. And they use sophisticated computational modeling to arrive at their conclusions.
However, one assumes that these particular mortgage rates will average 3.1% and the other 4.2% over the next year. There are no small differences.
And that gives me the irresistible opportunity to rephrase my favorite quote of all time:
The only function of economic forecasting is to make astrology appear serious.
– John Kenneth Galbraith, a late Harvard economist
Yet governments and hugely successful companies around the world still use economic forecasting when making critical decisions. Why? Because nothing goes further. You know these predictions can turn out to be wrong. But they prefer to decide based on some information when the only option isn't.
And that is the situation that the rest of us find ourselves in. We look at the forecasts and weight them along with the other information we have during our decision making. We know they are imperfect. But it doesn't go any further.
Who will be right
Fannie's team is very experienced and credible. But I'm afraid the MBA might turn out to be more specific.
Because Fannie seems to assume that the Federal Reserve throttling, which is likely to happen this year – and possibly as early as September – will not affect mortgage rates.
The Fed is currently buying huge amounts ($ 2.5 trillion-previous value) of mortgage-backed securities, which are a type of bond that (among some other minor influences) effectively determines mortgage rates.
The Fed is currently keeping mortgage rates artificially low. And if it slows down those purchases and then stops ("rejuvenates") them, it seems very likely to me that mortgage rates will go up.
History cannot repeat itself exactly this time. But the last time the Fed scaled back a similar asset purchase program in 2013, mortgage rates soared and stayed higher.
Fannie couldn't have missed that. And there must be good reasons to believe that (and the current boom) will have little impact on mortgage rates. But I can't imagine what those are.
Economic reports next week
Friday should be the most important day for mortgage rates next week. And that's largely because Fed Chairman Jerome Powell will be speaking (practically) that day at 10 a.m. ET at the annual Economic Policy Symposium for central bankers in Jackson Hole, Wyoming.
Now some thought he might choose this speech as the time to announce the beginning of the Rejuvenation (see above). But that now seems a lot less likely.
What he could do is signal that such an announcement will come soon. And anything he says that seems to make tapering safer or more imminent could make mortgage rates soar. Of course, there is nothing he can say about angry markets (he is a master at it) that would leave those interest rates untouched.
And by the time he speaks, Mr. Powell will have seen next week's key economic report, due out this morning. Inflation is one of the Fed's two main obsessions. And this report includes the July “core PCE,” the Fed's preferred inflation meter, and personal consumption expenditure (PCE) prices excluding food and energy prices. We'll also see the personal income and consumer spending numbers for July, which are also critical numbers.
Economic reports calendar
None of the other economic reports listed below are unlikely to cause much movement in the markets unless they include shockingly good or bad data. Additionally, regular readers know that investors have ignored most of the economic reports in the past few months. Therefore, the effects of the following may differ from the usual ones:
Tuesday – July New Home Sales Wednesday – July Durable Goods Orders Thursday – Weekly new unemployment insurance claims through August 21 plus updated Gross Domestic Product (GDP) estimate for the second quarter of this year Friday – July Personal Income, Consumer Spending, and Core PCE. Plus August consumer sentiment index. And, perhaps most importantly, Fed Chairman Powell's speech.
Chances are, you can relax by Friday. But be sure to watch out this morning.
Find and lock a cheap rate (August 21, 2021)
Mortgage rates forecast for next week
As I just explained, next Friday could be an important day for mortgage rates. But that will largely depend on what Fed Chairman Powell says in his speech this morning. Before, I expect mortgage rates to drift slightly next week and have nowhere to go. However, there may be some business in anticipation of this speech in the days leading up to it.
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.
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.