Today's mortgage and refinancing rates
Average mortgage rates fell inches yesterday. Although this means a decrease for three consecutive business days, the week ends at these higher rates. Because the climbs were bigger on Monday and Tuesday.
Mortgage rates could rise further next week. But that's little more than a guess. It's too early to decide whether the recent declines or the recent surges will turn out to be a short-lived rash.
Find a cheap rate and block it (August 15, 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 a cheap rate and block it (August 15, 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?
Don't underestimate the risks if you keep your interest rate fluctuating. It seems increasingly likely that the Federal Reserve will withdraw its support for these rates sooner rather than later. And the recovery continues to look strong. Both of these are likely to drive up mortgage rates.
We have seen a few falls this week, however, and may see more in the near future. But few experts expect significant declines, while more predict the rise will resume soon. Of course, experts with tiresome regularity are wrong. But I suspect they're right that the potential benefits of floating don't justify the serious risks.
For now, I'll leave my personal recommendations where they were last week. But I wouldn't be surprised if I had to switch them to lock across the board soon.
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?
In terms of certainty, little has changed since last week when I spoke of being "nobody knows" at one point.
The mortgage rate cuts we saw this week have been tiny and can't mean anything. Or they can be a resumption of the downtrend that started in April. It's just too early to tell.
But three things are likely to put upward pressure on interest rates:
The economic recovery has proven robust so far. It can be slowed down somewhat by the current wave of the delta variant. But it looks unlikely to be seriously disrupted, let alone undermined. Inflation is still warming up. And this week's numbers include some recent records. The Federal Reserve is increasingly likely to announce at the end of this month or next that it will “cut” (gradually reduce) its purchases of mortgage-backed securities, the bonds that primarily drive mortgage rates. These purchases are currently keeping mortgage rates artificially low. And a tapered announcement can push them up a lot
Each of these have been around for months, even during times of falling mortgage rates. But so far the markets have dismissed them.
And they can continue to do so. But it becomes more and more difficult for them to ignore these facts as they become more and more clear.
I recently reported on the growing chorus of senior Fed officials advocating an early announcement of a throttle. And this increasingly looks like an orchestrated plan by the Fed to soften investors.
When the Fed last announced that it would cut a similar program in 2013, mortgage rates soared. That was part of a market reaction known as a "taper tantrum". And part of that tantrum was due to shock. Because nobody expected the news to come so suddenly.
So it may be that the Fed is encouraging a public debate among its high-profile figures so that this time around, the markets give adequate warning of an impending change. We'll have to wait and see how this tactic develops.
Many now believe that a tightening will be announced on September 22nd, immediately after the next meeting of the Fed's monetary policy body, the Federal Open Market Committee (FOMC). Of course it can be later. However, some think that could be as early as this year's Economic Policy Symposium for Central Bankers in Jackson Hole, Wyoming, August 26-28.
In the meantime, we will likely gain new insights into the Fed's attitude towards tapering when the minutes of the last FOMC session are released at 2 p.m. (ET) next Wednesday.
What that means for mortgage rates
The three factors listed above should mean higher mortgage rates soon. But I've been saying that for months. And these higher rates have not yet occurred.
However, the fact that I was wrong about the timing doesn't necessarily mean that I was wrong about the event. And I think higher mortgage rates are almost inevitable anytime soon – disastrous news aside. Fortunately for me, almost all professional course observers agree.
You seem to agree that these three factors are becoming harder and harder to ignore. But when investors finally take off their blinkers could be next week, or next month, or even further ahead.
Economic reports next week
Tuesday's July retail sales include next week's key economic report. The second most important appears on the same day and concerns industrial production and capacity utilization (the percentage of our theoretical industrial capacity that we actually use), also for July. And the third report that could make waves is weekly unemployment. They'll come out on Thursday.
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 retail sales and retail sales excluding cars. Plus July industrial production and capacity utilization Wednesday – FOMC protocol. Plus building permits and housing in July Thursday – Weekly new applications for unemployment insurance until August 14th. Plus July index of leading economic indicators
So Tuesday is the most important day. But those FOMC minutes on Wednesday could make life exciting.
Find a cheap rate and block it (August 15, 2021)
Mortgage rates forecast for next week
Last week I said, "… we've got to a point of" nobody knows ". But if I had to guess, I would say Mortgage rates could go up next week. ”It turned out that I was right. Even with falls in the past few days, the rates were higher from Friday night to Friday night. This week I leave that prediction. But my confidence is similarly low.
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 refinancing 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. You can significantly influence 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.