Mortgage charges right this moment, August 21, 2020, plus blocking suggestions

Forecast plus today's mortgage rates

Average mortgage rates fell significantly yesterday. They are still a long way from their recent lows. But they are much more attractive than on Wednesday. VA loans start today at 2.25% (2.421% APR) for a 30-year fixed-rate mortgage.

Yesterday's decline was only partially due to friendlier markets. The rest was likely a correction after last week's sharp rises. These increases resulted from the federal regulator imposing additional costs on certain borrowers, some of which would have to be paid by lenders. It may be that some of these lenders have overreacted and are now reconsidering this. More on this below.

Find and block current rates. (August 21, 2020)

Conventional 30 years
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• 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.

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Market data that will (or may not) affect today's mortgage rates

Are mortgage rates getting closer to the markets they traditionally follow? It's certainly an inconsistent relationship that is being confused by behind the scenes Federal Reserve intervention. This is currently buying mortgage bonds and thus has an invisible effect on interest rates.

And there is always the possibility that a one-off event from the wall will mess up the best-calibrated calculations. like happened last Thursday and Friday. (See "The FHA Debacle" below.)

But if you still want to orient yourself by the markets, things looked earlier this morning something worse for mortgage rates today. Why? Late first readings of the Markit purchasing managers' indexes indicated that "US private sector output will expand strongly in August". And that could be enough to put pressure on mortgage rates later in the day.

The payment

Here the current status from this morning is at over 9:50 a.m. (ET). The data compared to about the same time yesterday were:

The 10-year Treasury yield increased from 0.64% to 0.65%. (Bad for mortgage rates.More than any other market, mortgage rates usually tend to follow these particular government bond yields, albeit more recently
Important stock indices started moving a little higher on the Markit news (above). (Neutral-Bad for Mortgage Prices.Often times, when investors buy stocks, they sell bonds, which lowers the prices of those bonds and increases yields and mortgage rates. The opposite happens when the indices are lower
Oil prices rose from $ 41.79 to $ 41.92 per barrel (Neutral for mortgage rates * because energy prices play a huge role in creating inflation and also indicate future economic activity.)
Gold prices held constant at $ 1,936 per ounce. (Neutral for mortgage rates *.) In general, it is better for interest rates when gold rises and worse when gold falls. Gold tends to rise when investors worry about the economy. And worried investors tend to cut rates.
CNN Business Fear & Greed Index pushed from 69 out of 100 possible points to 71. (Bad for mortgage rates.) "Greedy" investors push bond prices down (and interest rates up) when they exit the bond market and invest in stocks, while "fearful" investors do the opposite. Lower readings are therefore better than higher ones

* A few dollars change in gold prices or a matter of pennies in oil prices is a fraction of 1%. Hence, we count significant differences in mortgage rates only as good or bad.

Advice on rate lock

My recommendation reflects the success of the Fed's efforts to date to keep interest rates above average in combination with relatively harmless markets. I personally suggest:

LOCK when you approach 7th Days
LOCK when you approach fifteen Days
HOVER when you approach 30th Days
HOVER when you approach 45 Days
HOVER when you approach 60 Days

But it's entirely up to you. And you may still want to lock on days when prices are at or near their all-time low.

The Fed could cut rates even further in the coming weeks, though this is far from certain. And separately, persistent bad news about COVID-19 could have a similar effect on markets. (Read on to read the economists' predictions.) However, you can expect bad spots when they rise.

Equally important is that the coronavirus has created massive uncertainty – and disruptions that can defy all human efforts in the short term, including perhaps that of the Fed. So locking or hovering is a gamble in either case.

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Important Notes About Today's Mortgage Rates

The FHFA debacle

This is the story behind the sharp rise in mortgage rates last Thursday and Friday. If you are planning to refinance a Fannie Mae or Freddie Mac sponsored loan, you may have to pay more for the privilege. Because the Federal Housing Agency, which regulates the two companies, has just imposed new, additional closing costs.

Unless your loan is closed before the end of this month, the FHFA will pay you an additional 0.5% of the loan amount to supposedly cover the additional market risk. A $ 200,000 loan increases your closing cost by $ 1,000 (divide your loan amount by 200).

However, if you've already completed your refinancing, it might be the lender who takes care of the tab. However, mortgage banks often work with wafer-thin margins. Hence, through higher mortgage rates, they have passed the cost on to new applicants (and those who are not yet locked) on all types of mortgages. Hence the all-round higher mortgage interest rates on the last two days of the last working week.

The industry is in the poor. And on August 13th, around 20 bodies signed a joint declaration condemning the FHFA's move. Several US Senators have also written to the regulator asking for a rethink. If the federal agency gives in, interest rates could fall sharply again. But maybe you don't want to hold your breath.

The rate you actually get

Of course, few purchases or refinances qualify for the lowest interest rates found in some media and lender ads. These are usually only available to people with excellent credit scores, high down payments and solid finances (“top-tier borrowers” ​​in technical jargon). And even then, the state in which you buy can affect your rate.

Before locking, however, anyone who buys or refinances can usually lose if rates go up or win if they go down.

When the moves are very small, many lenders don't bother changing their price lists. Instead, you may have to pay a little more or less to complete the compensation.

The future

Overall, we still believe that the Federal Reserve will cut rates even further over time. And after the last meeting of its Political Committee, the organization confirmed that it plans to stick with this strategy for as long as proves necessary. At a press conference, Fed Chairman Jay Powell promised:

We strive to use all of our tools to support our economy in this challenging environment.

But there was a lot going on here before the green shoots of economic recovery emerged. Now there is more. And, as we saw earlier, the Fed can only influence part of the forces that sometimes affect mortgage rates. So nothing is insured.

Read “For once, the Fed is affecting mortgage rates. Here's why “to examine the essential details of this organization's current, temporary role in the mortgage market.

Higher rates to deter demand

We can see a repeat of a phenomenon that occurred earlier this year. When this happens, the lender's offices are so overwhelmed by the demand for mortgages and refinances that they cannot handle them.

Combine this with logistical issues as many employees are working from home due to the pandemic and you can see that some lenders may face an administrative breakdown.

In an attempt to deter some of the excessive demand, these lenders can artificially increase the interest rates they are offering. This is the only way they can prevent their employees from drowning in paperwork and the equivalent of the digital age.

And neither the markets nor the Fed can influence how this part of the pricing mechanism affects mortgage rates.

Freddie Mac's weekly prices

Don't be surprised if Freddies and our Thursday tariff reports rarely match. First of all, the two measure different things: weekly and daily averages.

But Freddie usually only collects data on Mondays and Tuesdays each week. And they are often out of date by the day they are released.

Definitely rely on Freddie's accuracy over time. But not necessarily every day or every week.

What Economists Expect from Mortgage Rates

Mortgage rate forecasts for 2020

The only function of economic forecasting is to make astrology seem respectable. – John Kenneth Galbraith, Harvard economist

Galbraith was clear about the economists' forecasts. But there is nothing wrong with taking them into account, appropriately seasoned with a pinch of salt. Who else are we going to ask when making financial plans?

Fannie Mae, Freddie Mac, and the Mortgage Bankers Association (MBA) each have a team of economists dedicated to monitoring and forecasting the impact on the economy, housing and mortgage rates.

The numbers – updated today

And here are her latest predictions for the average rate on a 30 year fixed-rate mortgage in each quarter (Q1, Q2 …) of 2020. Fannie updated his forecasts on Monday and the MBA updated theirs yesterday. Freddies, which is now a quarterly report, was released in mid-June.

Fannie Mae
Freddie Mac

Fannie's update on Monday included a forecast of an average rate of 2.9% for the fourth quarter of this year. This was the first time that we received a forecast for a rate below 3.0% in 2020 from any of these organizations.

Of course, none of these quarterly forecasts rule out daily or weekly averages that are lower than what they suggest over a quarter. Finally, quarterly averages can have some pretty sharp differences between highs and lows.

Fannie and the MBA were a bit more optimistic about interest rates in their monthly forecasts for August. And that makes Freddie's June (quarterly) look stale.

What should you conclude from this? That no one is sure about much, but that wild optimism about the direction of mortgage rates may be out of place.

Further ahead

The gap between forecasts is real and increases the further forecasters look ahead. Therefore, Fannie now expects that rate to average 2.8% in the first quarter of next year and drop to 2.7% for the remainder of 2021.

Freddie expects 3.2% this year. And the MBA assumes that it will be back at 3.1% in the first three quarters of 2021 and at 3.2% in the last three quarters. The MBA assumes that it will average 3.6% in 2022. You pay your money …

Still, all of these projections show significantly lower rates this year and next than they were in 2019, when it averaged 3.94% according to Freddie Mac's archives.

And remember, last year was the fourth lowest mortgage rate on record. Better still, this year could be an all-time low – barring shocking news. Of course, shocking news is a low bar in 2020.

Harder to get mortgages

The mortgage market is very chaotic right now. And some lenders offer significantly lower interest rates than others. When you borrow large amounts, such differences can add up to several thousand dollars in a few years – more for larger loans and over longer periods of time.

Worse still, many have restricted their credit. You may find it harder to find a withdrawal refinance, investment loan, jumbo loan, or mortgage if your creditworthiness is damaged.

All of this makes it even more important than usual that you bulk buy your mortgage and compare quotes from multiple lenders.

Economic worries

Mortgage rates traditionally improve (move down) the worse the economic outlook. Where the economy is now and where it might go is relevant to rate watchers.

The release of the minutes of the July meeting of the Fed's Federal Open Market Committee (FOMC) on Wednesday was sobering. In particular, they raised concerns about:

Uncertainty and long-term economic risks from the pandemic
Expiry of additional federal benefits under the Cares Act "against the background of a still weak labor market"
The coronavirus slowed the initial recovery, as it did at the beginning of summer, and moved to previously unaffected parts of the country
Possibility for banks and other lenders to tighten their lending criteria soon so that "the availability of credit for households and companies is restricted"

Fed worried about employment

Perhaps most worrying was that the minutes also said:

The projected recovery in real GDP and the pace of decline in the unemployment rate in the second half of the year are likely to be somewhat less robust than in the previous forecast.

So the FOMC painted an unfortunate picture. However, this is not the first time. And the markets seem adept at ignoring this – as long as it promises to keep pumping money into the economy. It repeated that very promise in these minutes.

One last downer for investors was something that was missing from the minutes. Some had hoped the Fed would try to manage long-term interest rates by effectively capping long-term government bond yields in what is known as yield curve control. It refused.

The President's Economic Announcements

To break the partisan congestion in Congress, President Donald Trump signed a series of executive orders and memoranda on August 8. These should provide an economic incentive to counter the effects of the coronavirus pandemic.

Some hoped the president's initiative could be a catalyst for lawmakers on Capitol Hill who failed to come up with a more sustainable stimulus package of their own. But no. The Senate is now on break until the beginning of September.

The effects of the executive orders are not yet clear. There are certainly many practical, and possibly legal, hurdles to overcome before they can produce tangible benefits.

For example, on Tuesday, about 30 employers' associations, led by the U.S. Chamber of Commerce, wrote to the White House that their members were unlikely to implement the president's move on withholding tax. You cited technical and logistical challenges. Their primary concern, however, appeared to be the potential tax liability employees might face if the administration fails to convince Congress to give away un withheld taxes.

Stimulate an urgent need

The threats to the economy posed by the current congressional deadlock are obvious. And you can see why the president wanted to intervene.

There can be good ideological and long-term economic reasons for discontinuing additional unemployment benefits. However, in the short term, this could affect millions, including those who don't receive it directly.

Most obviously, landlords may not receive their rents and have to face the expense of evicting tenants and finding new tenants while they are unable to pay their own mortgages. And lenders (those offering credit cards, personal loans, auto loans, etc., and mortgages) could encounter defaults, redemptions, and foreclosures across a broad population.

Equally important, some economists caution that waning federal benefits could hurt consumer spending, which could quickly affect the overall economy. On August 3, the Financial Times had the headline "US Economy at Risk as Unemployment Benefit Expires".

COVID-19 is still a major threat

The COVID-19 pandemic and its economic impact are currently the biggest impact on the markets. And national trends for new infections and deaths look encouraging.

However, there are still many states, cities, areas, and neighborhoods that are hotspots with increasing infections and deaths. And we haven't seen any shocking numbers yet. The national death toll last Wednesday was the highest in a single day since mid-May. And on August 8th, we saw that the total number of infections exceeded 5 million.

In a virus briefing at the White House on July 21, President Donald Trump warned:

Unfortunately, it will likely get worse before it gets better. Something I don't like to say about things, but it is.

A second wave?

Now there is more cause for concern. Several countries whose outbreaks appeared to be under control a few months ago (including South Korea, Spain, Germany, France and Italy) experience new peaks in infections. Equally important, economic data from Europe this morning suggests this could cause the recovery to slow.

Is such a second wave the fate that awaits the United States and its economy after it ceases antivirus?

Domestic threat

The main economic data has been looking good lately. But you have to see them in their wider context.

First, they follow catastrophic lows. They expect record profits after record losses.

Second, the pandemic is far from over. Some places are still recording a terrifying number of new cases and deaths.

While good news is more than welcome, it can mask the havoc COVID-19 has wreaked on the economy.

To care

Some concerns that still apply are:

We are currently officially in a recession

Unemployment is expected to remain high for the foreseeable future. Yesterday's unemployment figures were suddenly above a million (1,106,000) again. New unemployment insurance claims last week stood at 963,000, all of which they hoped would mark the start of an ever-improving trend. But that was the first time in 20 weeks that they had fallen below the million mark. And this week's number might suggest it won't be an easy departure

The first official estimate of the gross domestic product in the second quarter showed an annualized decline of 32.9%. If you look at the second quarter in isolation (not annualized), the decline in economic output over those three months was about 9.5%

Ön June 1stThe Congressional Budget Office reduced its expectations for US growth over the period between 2020 and 2030. Compared to its January forecast, the CBO now expects America to miss $ 7.9 trillion in growth this decade

The chief economist of the International Monetary Fund (IMF), Gita Gopinath, said some time ago: “We are definitely not out of the woods. This is a crisis like no other and will recover like no other. "

Third Quarter GDP

Do you need to cheer up after all this? The Federal Reserve Bank of Atlanta’s BIPnow readings suggest that we could see 25.6% growth in the third quarter, according to an August 18 update.

But this is also an annual rate. So it has to be compared to the 32.9% loss in the second quarter. And there is still time for the economy to fall behind if further bans are required or if the implementation of federal aid – whether announced by the president or a subsequent congress package – takes a long time.

Even so, we could see a light at the end of this pitch-dark tunnel.

The markets don't seem tied to reality

Many economists warn that stock markets may underestimate both the long-term economic impact of the pandemic and its unpredictability. And some fear that we are currently in a bubble that can only cause more pain if it bursts.

Economic reports this week

After a few eventful weeks we have a quiet time ahead of us. And here it is.

Forecasts are important

Ordinarily, any economic report can move the markets as long as it contains news that is shockingly good or devastatingly bad – assuming that news is unexpected.

This is because the markets tend to evaluate the analysts' consensus predictions (hereinafter we use those reported by MarketWatch) before the reports are released. Therefore, it is usually the difference between the numbers actually reported and the forecast that has the greatest effect.

And that means that even an extreme difference between the actual values ​​of the previous reporting period and this one can hardly have immediate effects, provided that this difference is expected and has been taken into account in advance.

This week's calendar

T.His week's calendar of major domestic economic reports includes:

Monday: Nothing

Tuesday: July Housing begins (actually 1.496 million *; forecast 1.252 million) and Building permit (actual 1.495 million *; forecast 1.333 million)

Wednesday: No reports. But the Federal Open Market Committee Minutes will be published at 2 p.m. (ET)

Thursday: Weekly new jobless claims until August 15 (currently 1,106,000 new claims to unemployment insurance; Forecast 910,000)

Friday: July Inventory sales (indeed 5.86 Millions of existing homes sold; forecast 5.5 million *)

* These numbers are seasonally adjusted annual rates (SAARs)

Chances are, this week's reports on Wall Street will hardly cause a yawn.

Rate lock recommendation

The basis for my proposal

Unlike on exceptionally good days, I suggest you Lock if you are less than 15 days after closing. However, we're looking at a personal judgment on a risk score here: Do the dangers outweigh the potential rewards?

At the moment, the Fed seems to be mostly on the ball (although the surge since the start of its interventions has shown the limits of its power). And I think it will probably stay that way, at least in the medium term.

But that doesn't mean that there won't be any disruptions along the way. It is entirely possible that mortgage rates will rise during times when not all of them are controllable by the Fed.

So I propose a 15 day cutoff. In my opinion, this optimizes your chances of riding inclines and taking advantage of falls. But it's really just a personal view.

Only you can choose

And of course, financially conservative borrowers may want to lock up immediately, almost regardless of when they close. After all, current mortgage rates are near record lows and much is secured.

On the flip side, risk takers might prefer to take their time and seize an opportunity in the event of future falls. But only you can decide what risk you are personally comfortable with.

If you're still floating, stay vigilant until you lock. Make sure your lender is ready to act as soon as you hit the button. And continue to watch mortgage rates closely.

When should you block anyway?

You may still want to put your loan on hold if you are buying a home and have a higher debt-to-income ratio than most. In fact, you should be more inclined to lock up as interest rate hikes could destroy your mortgage approval. As you refinance it becomes less critical and you can potentially play and hover.

When your graduation is weeks or months away, the decision to lock or float becomes complicated. Obviously, if you know rates are rising, you want to lock yourself in as soon as possible. However, the longer your lock, the higher your upfront cost. On the other hand, if a higher interest rate wiped out your mortgage approval, you probably want to lock yourself in, even if it costs more.

If you're still floating, keep in close touch with your lender.

Close help

At one time, in this daily article, we provided information on the extra help borrowers can get during the pandemic as they near close.

You can still access all of this information and more in a new, standalone article:

What causes interest rates to rise and fall?

In normal times (not now), mortgage rates are highly dependent on investor expectations. Good economic news tends to be bad for interest rates, as an active economy raises concerns about inflation. Inflation causes fixed income assets like bonds to decline in value and their returns (another way of saying interest rates) to rise.

For example, let's say you bought a $ 1,000 bond two years ago and paid 5% interest ($ 50) every year. (This is known as the "Coupon Rate" or "Par Rate" because you paid $ 1,000 for a $ 1,000 bond and because the interest rate is the same as the rate shown on the bond – 5% in this case).

Your Interest Rate: $ 50 APR / $ 1,000 = 5.0%

When interest rates fall

That's a pretty good price today, so many investors will want to buy it from you. You can sell your $ 1,000 bond for $ 1,200. The buyer receives the same $ 50 per year in interest that you received. It's still 5% of the $ 1,000 voucher. However, since he paid more for the bond, his return is less.

Your Buyer's Interest Rate: $ 50 APR / $ 1,200 = 4.2%

The buyer receives an interest rate or a return of only 4.2%. And so, when the demand for bonds increases and bond prices rise, interest rates fall.

When interest rates go up

However, when the economy warms, the inflationary potential makes bonds less attractive. When fewer people want to buy bonds, their prices go down and then interest rates go up.

Imagine you have your $ 1,000 bond but you can't sell it for $ 1,000 because unemployment has fallen and stock prices are rising. You end up with $ 700. The buyer gets the same $ 50 a year in interest, but the return looks like this:

50 USD annual interest / 700 USD = 7.1%

The buyer's interest rate is now just over 7%. Interest rates and returns are not a mystery. You calculate them using simple math.

Mortgage Rates FAQ

What are today's mortgage rates?

Average mortgage rates today are only 2.875% (2.875% APR) for a 30 year conventional fixed rate loan. Of course, your own interest rate will likely be higher or lower depending on factors like your down payment, creditworthiness, loan type, and more.

Are mortgage rates rising or falling?

Mortgage rates have been extremely volatile recently due to the impact of COVID-19 on the US economy. Interest rates fell recently when the Fed announced generally low interest rates for the next two years. However, if there is another surge in mortgage applications or if the economy recovers, rates could rise again slightly.

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 charge a range of rates, it 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.

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