Today's mortgage and refinancing rates
Average mortgage rates rose slightly yesterday, ending a brief two-day period of decline. The prices that day weren't at their peak in the last month. But they were close. However, apart from last year or so, they remain extraordinarily low.
I personally suspect that Mortgage rates go up next week and will remain higher for some time. But every uptrend is interrupted by periods of decline. And I can't be sure we won't see any of these in the next seven days.
Find and lock a cheap rate (October 16, 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 (October 16, 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?
Even after some worthwhile price declines this week, I see little point in increasing your price any further. Because I think further increases are much more likely than future decreases.
But not everyone agrees with me. True, few predict falls. However, some experts doubt whether future climbs will be as steep as I predict. So in any case "do your own research". After all, that is the catchphrase for this time.
In any case, my personal recommendations remain:
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?
Let's skip the Federal Reserve's tapering plans this week. If you're a new reader and unsure what these plans are or mean, you can catch up on that in last week's edition of this weekend report.
Instead, let's turn to inflation. This is important for mortgage rates because it is largely determined by the returns investors can get on a particular type of bond: a mortgage-backed security (MBS). These MBS offer investors a steady income. And if you were to buy one today, that revenue would be a little under 3% per year.
But hold on! Wednesday's consumer price index (CPI) showed that prices were up 5.4% year over year. And even if you factor out volatile food and energy prices (to get the "core CPI") which we hope – fingers crossed – calm down, you are still seeing this 4% YoY inflation metric.
Now imagine that you are an investor considering buying some MBSs. You will earn perhaps 2. x% income at a time when inflation is 5.4%. So your investment doesn't just deserve zero. It actually brings you a real loss.
Could inflation ease?
And it's not that you can immediately expect relief from higher prices. The producer price index and the import price index were also published this week. And none of them indicated a significant slowdown in the rise in CPI in the near future.
Of course, many economists believe that inflation could ease soon. But it cannot be taken for granted. Economist Paul Krugman wrote yesterday in an e-newsletter for the New York Times that he was in the camp of low inflation. But he admitted, "The data is so ambiguous that either side can claim that the evidence supports their assumption."
And he continued:
Why is it so hard to make a call for inflation right now? Because the current economy, which is still heavily influenced by the pandemic, is strange to use the technical term. In particular, the standard measures that economists use to distinguish between temporary price spikes and underlying inflation tell different stories.
With this in mind, what would you do as a potential investor in MBS? If I were you, I'd hold out until MBS prices fall and their yields rise.
And some of that is probably already happening on the market. But where do you keep your money while you wait, except in risky stocks? This is the dilemma faced by many actual investors seeking safe haven for their money.
More upward pressure on mortgage rates
Unfortunately, it's not just inflation and the Fed's tightening that will drive mortgage rates higher.
Retail sales for September yesterday were better than expected. And these indicated that the economic recovery remains on course. Of course, a strong economy almost inevitably means higher rates.
Meanwhile, the COVID-19 pandemic, which has caused low mortgage rates for the past 18 months, is showing signs of easing, at least in America. Since September 13, when the daily number of new infections nationwide was 285,058, the new infection rates have been falling continuously. And yesterday that number had dropped to 98,560, according to The New York Times.
Economic reports next week
We have received all the major employment and inflation reports for this month in the past few weeks. And those are the two measures that investors are currently obsessed with. So the markets could be relatively calm next week.
And none of the economic reports listed below are likely to cause much movement in the markets unless they include shockingly good or bad data:
Monday – September industrial production and capacity utilization Tuesday – September Building permits and start of housing construction Thursday – September Sale of existing homes and leading economic indicators. Plus weekly new applications for unemployment insurance until 16.10.
We are likely to have a quiet week ahead of us in terms of market reaction to economic reports.
Find and lock a cheap rate (October 16, 2021)
Mortgage rates forecast for next week
Yeah i guess Mortgage rates could rise again next week. However, any weekly forecast is less reliable than a daily or longer-term one.
With Daily you can see how the markets start the day. And with longer-term trends, you look at trends and weigh up probabilities. But anomalies often occur over seven days.
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.
And 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) 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 Rate And Payments The Biggest Down Payment You Can Save The Biggest Down Payment You Can – Lenders Like You To Get Real Skin In This One 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
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!
Eventually, you will find it 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.