Today's mortgage and refinance rates
Average mortgage rates rose yesterday. It was just a small increase. But it was the first time since the last days of March.
Does the first climb in almost three weeks mean the end of those happy days of constant falls? It could. But one day's movement is nowhere near enough to pass judgment. So I have to repeat last week's forecast: Mortgage rates next week are unpredictable.
Find and lock a low rate (April 18, 2021)
Current mortgage and refinancing rates
Conventional set for 30 years
Conventional 15 years fixed
Conventional set for 20 years
Conventional 10 years fixed
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
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Find and lock a low rate (April 18, 2021)
COVID-19 Mortgage Updates: Mortgage lenders are changing interest rates and rules due to COVID-19. For the latest information on how coronavirus is affecting your home loan, click here.
Should You Lock A Mortgage Rate Today?
The current lack of security is making life difficult for homebuyers. In the long term, I think mortgage rates are very likely to rise. But what should you do in the meantime?
I would suggest two things. First, speak to your lender to make sure you can lock out at any time. Second, you should watch very closely the movements in mortgage rates. Because it is possible that if they change direction they will rise sharply. As long as you do, you can choose to continue floating until rates start rising steadily again.
Unfortunately, I cannot predict when this change will occur. So my general recommendations remain:
LOCK when you approach 7th DaysLOCK when you approach fifteen DaysLOCK when you approach 30th DaysLOCK when you approach 45 DaysLOCK when you approach 60 Days
With so much uncertainty right now, however, your instincts could easily prove 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?
During the week I tried to come up with possible explanations for why mortgage rates were still falling when most would have expected them to rise. MarketWatch delivered a few:
Bond investors had assumed that the Federal Reserve would raise interest rates earlier than announced. But the Fed then sold them on the idea of actually keeping these rates low for longer. So the markets had to correct themselves. Concerns about the safety of some vaccines and the possibility of vaccine-resistant strains emerging have slightly dampened optimism about the economic recovery
And yesterday, Mortgage News Daily came up with a third possible explanation. It was believed that some traders had "short positions" that were bought on the assumption that interest rates would continue to rise. In other words, they were betting on higher rates.
When interest rates fell, they had to buy more bonds to cover their losses. And that pushed returns (and mortgage rates) down. Worse, the more they bought, the lower the yields fell, which meant they had to buy more. And that created a snowball effect.
Are you buying any or all of these statements? I think anyone could have contributed.
However, they all imply that the April drop in mortgage rates had very short-term drivers. And that it is likely that the upward trend from 2021 will resume soon. Why? Because the economic recovery seems to be firmly on course so far. And if that doesn't change, higher mortgage rates are all but inevitable.
Economic reports next week
This week bond markets have responded contrary to normal to economic data. So you've come across some good news. Why? Well, maybe the three explanations in the last section were the reason.
In any case, that means that you have to be careful with the economic reports next week. When these three exceptional drivers have played out, things can go back to normal. However, if they are still active, unexpected responses to new data may still occur.
Fortunately, there is little on the calendar next week. It's all in the last two days. And there aren't really any major reports to worry about.
Here are next week's key economic reports:
Thursday – Weekly new unemployment insurance entitlements. Also in March, Home Sales and Leading Economic Indicators Friday – Markit Purchasing Managers' Indices (PMIs) for the services and manufacturing sectors in April. Plus March new home sales.
Typically, the markets react to unexpectedly good news with higher mortgage rates. You usually see lower rates when the numbers are bad. However, this has not necessarily been the case lately. And it takes a lot to get them far.
Find and lock a low rate (April 18, 2021)
Mortgage rates forecast for next week
For a second week I have to say that M.Mortgage rates are essentially unpredictable right now. Previously, I gave three possible explanations for the April falls. But none of them are suitable for short-term forecasting.
Of course, I'm pretty sure these rates will go up again soon. Perhaps yesterday was the start of the resumption of the 2021 uptrend. But it is at least as likely that it will not. And nobody can be sure about a lot.
Mortgage and refinance rates usually move together. Note, however, that refinancing rates are currently slightly higher than those for purchase mortgages. This gap will likely stay pretty constant as it changes.
Meanwhile, a recent change in regulations has made most investment property and vacation home mortgages more expensive.
How is your mortgage rate determined?
Mortgage and refinancing rates are generally determined by the prices on a secondary market (similar to 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 from lender to lender. Boost your credit score. – Even a small bump can make a big difference to your interest rate and payments. Save the biggest deposit you can. – Lenders want you to have real skin in this game of your other modest borrowings – 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 a mortgage you can afford. 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 amount 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 homeowners association membership fees if you choose to live with an HOA anywhere. 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 have a hard time forgetting about closing costs. You can see this in the Annual Percentage (APR) that you will provide. 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 this is your first time buyer. Read:
Down payment assistance programs in each state for 2021
Mortgage rate method
The mortgage reports receive interest rates based on selected criteria from multiple credit partners on a daily basis. We'll 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.