Today's mortgage and refinance rates
Average mortgage rates fell a worthwhile amount yesterday. We'll get into why later. Discuss the risk that they will recover quickly.
Mortgage rates remain unpredictable next week. But there is a real chance that they will ascend under certain circumstances.
Find and lock a low rate (May 8, 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
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 (May 8, 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?
I would lock my plan today if I were you. Average mortgage rates are currently the lowest in well over a month. And maybe they won't stay that way for long.
But as always, that's just one man's opinion. You can choose to keep your interest rate floating. And it is always possible that they will keep falling. However, in my view, it is much more likely that they will rise soon. Read on to find out why I think so.
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?
The trigger for the relatively sharp decline in mortgage rates yesterday was some economic data released this morning. It was the government's monthly employment report, often the most influential of all.
Economists had expected employment to rise by about a million jobs in April. But the real number was 266,000. In most months that would be a win. But we are still recovering from the pandemic. And with nearly 10 million jobs being lost as a result, we need a large number to catch up.
When the job report was released, the markets reacted as expected. The stock indices fell and bond yields fell. But then something strange happened. Both the indices and yields rallied quickly. Perhaps alone mortgage rates stayed near their lowest point.
Outlier reports occur from time to time. And the employment data at the beginning of the week was good. Investors quickly decided this was a one-time freak. And resumed business as usual. As a result, 10-year government bond yields, which bottomed at 1.52% around 10:30 a.m. ET, rose back to 1.57% in the late afternoon.
Regular readers will be aware of the close relationship between these 10-year government bond yields and mortgage rates. They don't march in lockstep. But over time, these interest rates usually shade those returns more accurately than expected.
So the question is: will the rubber band that is currently stretched between the two suddenly snap back next week? Nobody can be sure. But it's a reasonable scenario. And if it does, this could be a unique opportunity today to lock at a great rate.
Economic reports next week
It's an interesting week for economic reports. The star is likely to be Friday retail sales. However, investors are currently very much focused on signs of future inflation. Therefore, you can watch the consumer price index on Wednesday, the producer price index on Thursday and the import price index on Friday.
Regular readers will know, however, that the markets have ignored most of the economic reports over the past few weeks. Therefore, the following effects may differ from the usual ones:
Tuesday – April NFIB Small Business Index
Consumer Price Index (CPI) Wednesday through April, including core CPI
Thursday – producer price index for April. Plus new claims for unemployment insurance every week
Friday – April retail sales, industrial production and import price index. Plus May consumer sentiment
Is It Going to be an Interesting Week for Mortgage Rates? That depends in part on how (and if) investors react to these reports.
Find and lock a low rate (May 8, 2021)
Mortgage rates forecast for next week
Yes, Mortgage rates remain essentially unpredictable. However, the scenario described above, where they snap back after the fall on Friday, is a real possibility. That's why I play it safe today and block.
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?
The time you spend getting these ducks in a row can result in you winning 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.