Today's mortgage and refinancing rates
Average mortgage rates fell moderately yesterday. But they increased over the week.
However, things are different now than they were earlier in the week. And the chances are good Mortgage rates are falling next week. Whether this is the case, however, depends on the upcoming news about the new Omicron COVID-19 variant.
Find and lock a cheap rate (November 27, 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 (November 27, 2021)
Should You Lock A Mortgage Rate Today?
Most markets were hit by a metaphorical express train yesterday. This came in the form of a new variant of the coronavirus, which the World Health Organization (WHO) calls "Omicron". Read on to get my thoughts on what this could mean for mortgage rates.
If Omicron does what some scientists fear, lower mortgage rates will likely follow suit. But it's too early to be sure this isn't a false positive. Therefore, I leave my personal rate lock recommendations for the time being. but I wouldn't lock my rate until the situation is clearer if I were you.
Therefore, these recommendations remain for the time being:
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?
Last week, I suggested that a winter wave of COVID-19 infections could result in lower mortgage rates while it lasts. But the new Omicron variant (aka B.1.1.529) surprised me and the rest of the world.
Yesterday, BBC News stated that thousands of COVID-19 variants were already in circulation. But most of them had very similar effects on humans. It went on:
But this new variant is of particular concern to experts because it is very different from the original Covid, against which current vaccines have been developed. It has a long list of genetic changes – 50 in total. Of these, 32 are located in the virus' spike protein – the part that vaccines target. However, it is still too early to know how high the threat posed by B.1.1.529.
– BBC News, "What are the Covid variants and will vaccines still work?", November 26, 2021
Existing vaccines are precisely designed to protect against existing variants. As such, no one is sure how effective they will be against Omicron's new spike protein.
Most experts believe that they still offer some protection. For example, The Guardian reported overnight:
The director of the Oxford Vaccine Group, which developed the AstraZeneca vaccine, was cautiously optimistic that existing vaccines could effectively prevent serious diseases from the Omicron variant and said the pandemic is unlikely to restart.
The Guardian, Covid Live, November 27, 2021
But other scientists are more afraid. And all we know for sure is that no one is sure about much.
Not here yet
The new variant was first identified in South Africa, although this may be due to the sophisticated virus monitoring resources. However, there are already confirmed cases in Hong Kong, Israel and the UK. And there are suspected cases in the Czech Republic and Germany.
Meanwhile, when two flights from South Africa landed in the Netherlands overnight, 61 passengers tested positive for COVID-19, although it will take some time to find out how many, if any, had the new variant. A New York Times reporter who was on one of these flights reported that up to a third of passengers disregarded the airline's mask mandate.
So far, no cases are known in the USA. And the government will ban flights from South Africa and seven other countries from Monday.
Omicron's Impact on Markets and Mortgage Rates
You probably already know that there are few things that markets hate more than uncertainty. And most reacted sharply to news about Omicron yesterday. For example, the Dow had its worst Black Friday ever.
The Wall Street Journal explained what happened to bonds:
Investors piled up government bonds and quickly adjusted their expectations for rate hikes in response to the new COVID-19 variant first identified in South Africa. The yield on 10-year US Treasuries fell to 1.484% on Friday, from 1.644% at close of trading on Wednesday, according to Tradeweb. This is the biggest drop in trading sessions since March 2020, at the start of the coronavirus pandemic. Yields fall when bond prices rise.
– WSJ, “COVID-19 variant switches investors' bets on interest rate increases” (Paywall), November 26, 2021
That's a huge drop in a day by any measure, but especially on a day when the market closed around noon. Mortgage interest rates fell only moderately.
Where? Well, some lenders may not have adjusted their price lists that day to reflect the extent of the decline in the mortgage-backed securities market, which is the type of bond that largely drives mortgage rates.
And if it does, we may see further – perhaps significant – cuts in mortgage rates today and next Monday morning.
And I would expect low mortgage rates to continue – and lower mortgage rates to be the short-term trend – at least until scientists better understand the likely health and economic effects of Omicron. And that can take weeks.
Without the pandemic, mortgage rates would almost certainly rise. Because economic news (including data released earlier this week) all show strong economic recovery. And a strong economy and higher mortgage rates almost always go hand in hand.
True, one could argue that warm inflation is more of a weakness than a strength. But that also usually entails higher interest rates.
So if mortgage rates drop again, it will be due to COVID-19. This may be because the Omicron variant is just as dangerous as some fear. Or it could be because a new winter wave of infections is causing economic disruption. Or both.
Economic reports next week
We'll see some major economic reports next week, including the monthly employment report. However, if the markets continue to be spooked by Omicron, they could all be dismissed.
The main ones below are in bold. But none of the other economic reports listed below are likely to cause much movement in the markets unless it includes shockingly good or bad data:
House sale Monday – October Tuesday – November Consumer confidence indexWednesday – November ADP employment report (Private sector jobs) and the Institute for Supply Management (ISM) industry index. Construction Spending in October Thursday – Weekly new claims for unemployment insurance through November 27th, Friday to November Employment report, consisting of non-agricultural payrolls, unemployment rate and average hourly wage. Plus ISM service index for November. And the factory orders for October
Friday would normally be a very important day. But investors might be too obsessed with Omicron to notice.
Find and lock a cheap rate (November 27, 2021)
Mortgage rates forecast for next week
Mortgage rates could go down next week. And it's all down to Omicron's COVID-19 variant.
Mortgage and refinancing rates usually move in parallel. And a gap that had grown between the two was largely closed with the removal of the disadvantageous market refinancing fee.
Meanwhile, another recent regulatory change has likely made investment property and vacation rental mortgages more accessible and less expensive.
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) that trade mortgage-backed securities.
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 LenderImprove Your Credit – Even A Small Boost Can Make A Big Difference To Your Interest Rate And PaymentsSave 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 Any 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
Make sure to count all 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's 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 distributes them effectively over the life 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 interest rates based on selected criteria from multiple credit partners on a daily basis. 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. For example FHA fixed with FHA fixed. The result is a good snapshot of the daily rates and how they change over time.