Today's mortgage and refinance rates
Average mortgage rates rose yesterday. But only by the smallest measurable amount. And traditional loans today start at 3.063% (3.063% APR) for a 30-year fixed-rate mortgage.
Those rates were practically unchanged this week. They barely moved in a day and those tiny changes were alternately up and down.
Next week is especially difficult to call. Because mortgage rates are even less responsive to other markets (and even their own) than usual. Will the elastic continue to stretch? Or will it snap back? I guess The prices could go up a bit.
Find and Lock a Low Rate (December 5, 2020)
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 (December 5, 2020)
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?
Over the past few weeks I've been suggesting that you might want to postpone your interest rate until you are within a week or two of closing. And that's because I expect mortgage rates to drop further for a few months.
I still think these falls are on the agenda. But we could be in a brief phase of ascension. For more information, see "What's Driving Current Mortgage Rates?" (Below).
Please note, however, that the duration of these increases (and whether they occur at all) can only have very speculative answers. Right now, I guess they are humble and will only last a few days.
For now, my personal recommendations are:
LOCK when you approach 7th DaysLOCK when you approach 15th DaysHOVER when you approach 30th DaysHOVER when you approach 45 DaysHOVER when you approach 60 Days
But with so much uncertainty right now, your instincts could easily turn out 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 still think the most likely scenario for mortgage rates is for them to move Lower slowly and gently – with occasional and short climbs. But there are signs that we might see some of them increases this week.
If mortgage rates were to shadow the markets they frequently chase, they would already be much higher. The US 10-year Treasury yield hit a low of 0.756% on November 6th. Yesterday it closed at 0.969%.
But Freddie Mac hit another all-time low for mortgage rates this week. More surprisingly, mortgage-backed securities (MBS) – the securities that are directly tied to mortgage rates) also increased. So how is it that consumer tariffs don't?
Well, the lenders kept mortgage rates artificially high. Because if they hadn't, they would have been inundated with an excessive demand for mortgages. And these higher prices have created a cushion against increases.
But at some point every pillow hits the floor and is no longer comfortable. How close is this to it? And how heavy could the resulting bump be? Unfortunately, no one can be sure.
New threat – incentive
The event most likely to cause interest rates to hike next week is the adoption of a stimulus package. Of course there is no certainty that one will become law. But the odds are better. And that alone could be enough to raise mortgage rates.
The pandemic continues to create real financial hardship for tens of millions of Americans. And putting some money in your pocket will give the economy a boost.
Other new threats
There are a few other things that could put pressure on these rates. The first happened last week and was an agreement between members of OPEC (Organization of Petroleum Exporting Countries) and Russia to limit oil production. That should relieve the domestic energy industry somewhat.
And the second concerns the Federal Reserve. It is possible (but personally I doubt it) that its political committee (the Federal Open Market Committee or FOMC) will decide to end or curb its purchases of MBS. We will hear of his decision through an announcement on December 16th.
And such containment or termination will almost certainly keep mortgage rates high for a long time. In fact, strong rumors before December 16 could be enough to send them higher.
As I said, I suspect this is a red herring. Is the Fed really going to jeopardize the housing market, which is one of the few bright spots right now? But others don't agree with me. And you need to know the possibility.
The reason I think mortgage rates need to keep falling is because of the COVID-19 pandemic. Yesterday alone, 228,767 new cases (a record) and 2,637 deaths were reported, according to the New York Times.
And, of course, this recent surge is having a real economic impact. For example, California Governor Gavin Newsom has announced new contracts worth millions in his state. National employment numbers on Thursday in November were deeply disappointing. Around 10 million Americans who lost their jobs in the spring still have to find new jobs.
Mortgage rates almost always fall when the economy is in trouble. And they rise when it thrives. It's hard to imagine a time when the prospects were worse.
Economic reports next week
Much of next week's economic reports cover the third quarter of the year or October. And these periods are not related to the current conditions. The most important and current reports come on Thursday:
Weekly initial applications for unemployment insurance November consumer price index
The first reading of this month's consumer sentiment index will take place on Friday. And the markets may pay attention too.
Find and Lock a Low Rate (December 5, 2020)
Mortgage rates forecast for next week
I expect mortgage rates to be … unpredictable for the next seven days. We are sorry! I'm usually ready to make a prediction. And if you put a gun to my head, they'll probably go up moderately.
But my confidence in that is low. Could this pillow (see above) still "give" enough to protect the borrowers? If so, we could see little movement. And could these threats (also above) go away? Again that could see that they barely moved. And maybe even deeper.
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 depending on the 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 like you have real skin in this modest borrowing game – 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?
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. These are taken into account in the annual percentage (APR) you specify. 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.