Today's mortgage and refinance rates
Average mortgage rates just went down yesterday. It was a welcome end to a bad week for these prices. Because that has led to an increase in the four previous working days (some noticeable).
We have to say that again Mortgage rates next week are unpredictable. That is no excuse. But this strange period of economic recovery makes short-term predictions less than worthless. Read on for why.
Find and lock a low rate (May 15, 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 15, 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?
As of yesterday, mortgage rates are currently at their highest level since April 21, according to the Mortgage News Daily. Yes, they could keep falling. However, the heady days of the first half of April, when they fell steadily, are unlikely to recur anytime soon.
I suspect they could go higher over the next month, if not necessarily sharply. However, we are currently in uncharted territory. And nobody can be sure about a lot. Read on for the details.
Personally, I believe that caution should be exercised when suspending or postponing a course. And I'd rather lose a little if I lock up too early than take the risk of losing a lot if I float too long. However, if you hold the opposite view, then that's fine. Right now, these decisions have more to do with your personal risk tolerance than an informed decision based on empirical data.
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?
Comerica Bank's weekly economic e-newsletter yesterday described the current situation well:
This week's US economic indicators show how strange the economy is now and will be for some time to come. The shock waves of COVID lockdowns, massive monetary and fiscal incentives, reopenings and political wind-up are affecting the system.
– Comerica Bank, Comerica Economic Weekly, April 14, 2021
As a result, many economists struggle to find traction as their models and theories are exposed to this madness. So some believe that seriously high (perhaps out of control) inflation is on the horizon. Others consider this highly unlikely.
The great inflation debate
During the week, economist Paul Krugman (Paywall) pointed out a large number of colleagues who predicted high inflation as the Obama administration boosted the economy during the Great Recession. Then, as now, there was a time when inflation got hotter than usual.
But that only lasted a few months. And after that it settled down to its normal range.
In reality, no one can be sure what will happen. However, should inflation rise significantly, mortgage rates will most likely rise rapidly. And the current fear of future inflation is already putting a certain amount of upward pressure on them. Worse, there is a secondary risk: that enough of us will buy the runaway inflation narrative to turn it into a self-fulfilling prophecy.
Of course, inflation is not the only possible cause of higher mortgage rates. If the Federal Reserve's forecasted economic recovery materializes, that could be enough to raise these interest rates noticeably on its own.
But there are also risks that can cause them to fall. The most obvious of these is the possible emergence of a new variant of the COVID-19 virus that is resistant to vaccines. If this caught on, it could wipe out the economic recovery and put us back in first place – including the extremely low mortgage rates.
Economic reports next week
This week's most influential economic report is unlikely to be an economic report at all. These are the minutes of the last meeting of the Federal Open Market Committee (FOMC) of the Federal Reserve. This is the Fed's main monetary policy body. And invariably, investors and analysts considered every word.
However, the other impulses listed below are unlikely to race. Additionally, regular readers will know that the markets have ignored most of the economic reports for the past few weeks. Therefore, the following effects may differ from the usual ones:
Tuesday – May building permits and start of housing
Wednesday – Minutes of the last FOMC meeting
Thursday – April index of main economic indicators. Plus new claims for unemployment insurance every week
Friday – April inventory sales. Plus first measured values (“lightning bolts”) of the purchasing manager indices for services and manufacturing by Markit in May
So watch out for the FOMC minutes on Wednesday.
Find and lock a low rate (May 15, 2021)
Mortgage rates forecast for next week
Unfortunately nothing has changed. And Mortgage rates remain essentially unpredictable. Now you know "how strange the economy is right now," as Comerica Bank (above) said. I hope you will forgive me.
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 borrowing modest – The lower your other monthly obligations, the higher the mortgage you can afford. Choose your mortgage carefully.
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.