Today's mortgage and refinance rates
Average mortgage rates fell yesterday. But there followed six days without a fall, five of which showed climbs. And the averages remain noticeably higher than at the beginning of the new year, when they were at or near their all-time lows. Even so, they remain amazing bargains in every way.
Unfortunately, there are no reliable trends at these rates yet. But there are enough danger signals to exercise caution.
Therefore, I would block 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 16, 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 16, 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?
Probably. But I said that last week. And mortgage rates have since declined, albeit slightly.
Personally, when the rates are in their current state, my instinct is to be careful. That's why I would lock as soon as possible.
However, it is entirely possible that these rates will continue to fall and possibly even hit new all-time lows. And if you are feeling brave, no one can blame you for waiting. Just be aware of the stakes you are playing with.
However, regardless of your inclination, read the next section before making your choice. At least some information will help you make your decision. In the meantime, 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?
I have written a lot over the past week about the two conflicting forces currently operating on mortgage rates. On the one hand, there is the economic damage caused by the pandemic which is trying to cut interest rates. On the flip side, there is a prospect of much higher government spending and borrowing which will push them up.
On Tuesday, the Treasury Department auctioned 10-year bonds valued at $ 38 billion. And there was surprisingly strong demand for these. In fact, it was this auction that held back rising bond yields and mortgage rates (these rates usually shadow those returns).
However, the outcome of one auction is a poor predictor of the outcome of the next. And you would be brave to the point of folly to assume this is the end of the upward pressure.
On Thursday, President-elect Joe Biden unveiled a $ 1.9 trillion pandemic stimulus (or relief) plan. However, his party lacks the 60 Senate seats required to enforce the enabling laws.
But many are expecting over $ 1 trillion in new loans. And more are likely to follow to fund infrastructure and other spending plans.
High demand for government bonds should therefore ultimately lead to higher government bond yields. And that should cause mortgage rates to rise.
Meanwhile, the pandemic continues to rage at an alarming level. At least 3,744 new coronavirus deaths and 240,925 new cases were reported in the United States on January 15, according to the New York Times.
Of course, this has serious economic implications. Comerica Bank's chief economist, Robert A. Dye, Ph.D. suggested yesterday:
December and early January US economic data was in line with much cooler growth in aggregate activity compared to the historic recovery in GDP in the third quarter.
Comerica Economic Weekly Newsletter, January 15, 2021
However, that "cooler growth" could turn out to be negative growth this quarter, and there is a real possibility of a double-dip recession. Retail sales yesterday showed a decline for the third straight month. And the latest monthly and weekly employment data has been terrible.
Yes, the vaccination campaign will help. But it started slowly. And we are probably looking at each other a few months before the prospect of a return to near-normal economic activity. Meanwhile, this will be a burden and keep mortgage rates lower than usual.
Will Government Borrowing Raise Mortgage Rates? Or will the economic impact of the pandemic drag them down? Nobody knows that right now.
Economic reports next week
Next Monday is Martin Luther King Jr. Day. And the markets are closing, so we don't post our daily update on mortgage rates. But we'll be back on Tuesday.
The next week is relatively quiet for economic reports:
Thursday – Weekly new unemployment insurance entitlements. And housing construction begins in December, and housing permitsFriday – December sale of existing houses
It would be surprising if any of these factors (other than unemployment rates) had a big impact on the markets.
Find and Lock a Low Rate (Jan 16, 2021)
Mortgage rates forecast for next week
Nothing has changed. And Mortgage rate movements are inherently unpredictable. You could really go either way, though probably not very far.
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 amount 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.