Today's mortgage and refinance rates
Average mortgage rates fell yesterday. Interest rates fell noticeably in the first half of April. But they barely moved in the second half.
We have held onto what one analyst has called "market indecision" for the past few weeks. And the lack of a crucial direction forces me to repeat my most recent mantra: Mortgage rates next week are unpredictable.
Of course, I'm still pretty sure that mortgage rates will soon resume their uptrend. But I do not know when. Read on for my reasons.
Find and lock a low rate (May 1, 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 1, 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?
Just because my recommendations below suggest locking, doesn't mean you should start immediately following my advice. Yes, I think mortgage rates will go up again soon. However, if you want to take advantage of more falls, definitely do so.
However, be aware that there is some risk involved in doing so. Because it is possible for rates to rise quickly once the dam bursts. Call your lender now to make sure they can be blocked the moment you choose to do so. And decide to monitor mortgage rates closely – at least on a daily basis.
Still, 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?
I'm still a little confused about why mortgage rates aren't going up any higher. Almost all recently released economic data points to a boom later this year. And booms almost always bring higher rates.
Indeed, many commentators and analysts are optimistic. Earlier this week, RBC announced that US Treasuries would be "shorted out" (betting yields would rise). The relationship between mortgage rates and returns on the 10 year benchmark Treasury note is close and has long been known.
Meanwhile, many others share the positive opinion behind RBC's decision. In his weekly newsletter, Robert A. Dye, Ph.D., Comerica Bank's chief economist, wrote yesterday:
US economic indicators were positive this week, showing strong expansion in the US economy in the first quarter, preparing us for robust overall growth in 2021.
– Comerica Bank Weekly, April 30th
The latest survey of executives by global consulting firm McKinsey & Company, released yesterday, was similarly optimistic:
In our latest McKinsey global economic survey, executive views are just as positive as they were in March – even if the pandemic continues to dwarf other growth risks. It is a particularly acute risk in India, where in the week following the on-site survey, the number of daily COVID-19 cases hit a new world record.
Worldwide, 73 percent of all respondents believe that conditions in the global economy will improve in the next six months. That's the largest proportion to say this year-round, while the proportion of executives who expect conditions to deteriorate has shrunk by more than half in the past three months: 10 percent say so now, compared with 23 percent in January.
– McKinsey & Co., "The Coronavirus Effect On Global Economic Sentiment," April 30, 2021
Waiting for climbs
And yet mortgage rates stay stable when you can expect them to go up. Where from? Well, we come back to a quote from the Wall Street Journal on April 21st that we quoted around this time last week: “Many investors remain optimistic about the outlook … but they are increasingly concerned that cases will rise Coronavirus around the world could delay plans to reopen business activity. "
How long can investors ignore the excellent domestic news and focus on tragic events in India and elsewhere overseas? Your guess is as good as mine. But I doubt it will be long.
Economic reports next week
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:
Monday – Institute for Supply Management (ISM) production index for April. Plus March construction spending and April auto sales
Wednesday – April ADP Employment Report (Private Sector). Plus ISM service index for April
Thursday – Productivity and Unit Labor Costs for the first quarter of 2021. Plus new unemployment insurance entitlements every week
Employment report from Friday to April, consisting of wage and salary slips outside of agriculture, unemployment rate and average hourly wage
This official report on Friday's employment situation is by far the most significant on next week's calendar. Indeed, it could be argued that this is the main economic report currently published. But will the markets take notice?
Find and lock a low rate (May 1, 2021)
Mortgage rates forecast for next week
I am forced to report this again Mortgage rates are essentially unpredictable right now. Fortunately, these rates have settled down over the past few weeks with only minor increases and decreases. According to the Mortgage News Daily, when you were locked on April 15th, your average rate was only 4 basis points higher than when you were locked yesterday. And a basis point is one hundredth of 1%.
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. – 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 size 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.