Today’s Mortgage and Refinance Rates
Average mortgage rates increased only slightly yesterday. But that was enough to bring them to their highest level since April.
The good news is that these rates remain exceptionally low by almost any standard. Over the past 50 years, they’ve only been lower than they were last night for a few months, all since August 2021, according to Freddie Mac’s records.
Yesterday’s disappointing employment report means it may rise more slowly for some time. Corn I suspect they will go even higher next week. Bond markets are closed for Columbus Day next Monday. We will therefore be back on Tuesday.
Find and Lock in a Low Rate (Oct 9, 2021)
Current mortgage and refinancing rates
|Conventional 30 years fixed||3,246%||3.263%||+ 0.09%|
|Conventional 15 years fixed||2,531%||2.56%||+ 0.05%|
|Conventional 20 years fixed||3.045%||3.079%||+ 0.03%|
|Conventional 10 years fixed||2.503%||2,561%||+ 0.09%|
|30-year fixed FHA||3,205%||3.967%||+ 0.05%|
|15 years fixed FHA||2,552%||3,196%||+ 0.15%|
|5/1 ARM FHA||2.406%||3.076%||-0.01%|
|Fixed VA over 30 years||3.007%||3.199%||+ 0.05%|
|VA fixed 15 years||2,725%||3.074%||+ 0.01%|
|5/1 ARM VA||2.501%||2.312%||Unchanged|
|Prices are provided by our network of partners and may not reflect the market. Your rate may be different. Click here for a personalized quote. See our pricing assumptions here.|
Find and Lock in a Low Rate (Oct 9, 2021)
COVID-19 Mortgage Updates: Mortgage lenders change rates and rules due to COVID-19. To see the latest information on the impact of the coronavirus on your home loan, click here.
Should you lock in a mortgage rate today?
I would lock in my mortgage rate now if I were you. Of course, no one can see into the future. And I could be wrong.
But the forces that are trying to push those rates up seem to me to be much stronger than those that are trying to bring them down. More on those below.
Anyway, my personal recommendations remain:
- LOCK if closing 7 days
- LOCK if closing 15 days
- LOCK if closing 30 days
- LOCK if closing 45 days
- LOCK if closing 60 days
However, with so much uncertainty right now, your instincts could easily turn out to be as good as mine, if not better. So let your instincts and your personal risk tolerance guide you.
What changes current mortgage rates
All last week, I hit the nail on the head on yesterday’s employment report. The Federal Reserve had signaled that it would liquidate (“cut”) its cheap money policies (aka “quantitative easing”) from November 3 – unless this report was really terrible.
And these policies have probably been the main factor that has kept mortgage rates artificially low over the past 18 months. You may think it is very likely that these rates will rise once the Fed begins to withdraw support. Indeed, the recent increases are likely due in large part to the Fed’s announcement that it would.
So the question now is: Was the jobs report so bad that the Fed will delay its November 3 phase-out announcement, maybe for six weeks or even longer? Unfortunately, this is a judgment. And observers disagree on the implications.
Yesterday, following the report, the Wall Street Journal (paywall) headlined, “Jobs report keeps Fed Taper on track for November.” And Reuters confirmed:
The Federal Reserve could start reducing support for the economy next month despite a sharp slowdown in job gains last month as the latest spike in COVID-19 cases in the United States peaked and began to move back.
– Reuters, “Fed closes November bond drop after jobs report”, October 8, 2021
But others, including Barron’s and Investors.com, are less certain, suggesting that a delay in the reduction was still strongly considered.
However, bond markets (one of which largely determines mortgage rates) voted with their feet, with 10-year Treasury yields – and mortgage rates – ending the day higher than they did. had started.
Other forces are pushing mortgage rates up
Unfortunately, even if the Fed delays tapering, I doubt we will see any sharp and sustained mortgage rate cuts. Because another driver of lower rates seems to be evaporating, at least for now.
Clearly, the COVID-19 pandemic was the underlying reason for the drop in mortgage rates. Indeed, it was she who forced the Fed to implement its cheap money policy.
And, since mid-September, the number of new infections reported in America has dropped significantly. Investors, who have long feared the economic consequences of the pandemic, are suddenly in a sunnier mood. And that’s bad for mortgage rates.
At the same time, other factors unfavorable to low interest rates are gaining ground. For example, higher inflation is proving to be much more persistent than many thought. And that’s never good news for borrowing costs.
Of course, there is always the possibility that something will happen that changes everything. For example, a virulent and virus-resistant new strain of SARS-CoV 2 (the virus that causes COVID-19) could emerge and reverse the current direction of the economy and mortgage rates. But let’s hope that this and any other disaster of a similar magnitude remains unlikely.
Economic reports next week
While this week was all about jobs, next week will be mostly about inflation. And these are the two hot topics for investors right now.
If next week’s numbers show inflation persists or increases, expect more upward pressure on mortgage rates. But watch out for another big report: September retail sales. Investors will likely see this as an indicator of the strength of the economic recovery.
Wednesday brings the release of the minutes of the last meeting of the Federal Open Market Committee (FOMC), the Fed’s main monetary policy body. Investors are still looking at these. But, with these minutes, they will look for more clues as to when the reduction is due.
None of the other economic reports listed below are likely to cause much movement in the markets unless they include some incredibly good or bad data:
- Monday – Columbus Day – No report
- Tuesday – August job offers
- Wednesday – Consumer Price Index (CPI) and September core CPI (CPI without volatile food and energy prices). Plus publication of FOMC minutes (see above)
- Thursday – September producer price index. And new weekly unemployment insurance claims until October 9.
- Friday – September retail sales and import price index. More consumer confidence index in October
Attention Wednesday and Friday!
Find and Lock in a Low Rate (Oct 9, 2021)
Mortgage interest rate forecasts for next week
In short, I am waiting mortgage rates will rise again next week. But, of course, with so much uncertainty around, that’s an educated guess at best.
Mortgage and refinancing rates generally move in tandem. And a growing gap between the two has been largely eliminated by the recent removal of unfavorable refinancing fees from the market.
And another regulatory change, announced this week, has likely made mortgages for investment property and vacation homes more accessible and less expensive.
How your mortgage interest rate is determined
Mortgage and refinancing rates are generally determined by prices in a secondary market (similar to stock or bond markets) where mortgage-backed securities are traded.
And it depends heavily on the economy. Mortgage rates therefore tend to be high when things are going well and low when the economy is struggling.
But you play an important role in determining your own mortgage rate in five ways. And you can significantly affect it by:
- Find Your Best Mortgage Rate – They Vary Dramatically From Lender to Lender
- Increase Your Credit Score – Even a Small Bump Can Make a Big Difference in Your Rate and Payments
- Save the Biggest Down Payment Possible – Lenders love you to have real skin in this game
- Keep your other loans small – The lower your other monthly commitments, the larger the mortgage you can afford
- Choosing Your Mortgage Carefully – Are you better off with a conventional, FHA, VA, USDA, jumbo or whatever loan?
The time spent getting those ducks in a row can earn you lower rates.
Remember, it’s not just a mortgage rate
Be sure to count all of your upcoming homeownership costs when determining how much mortgage you can afford. So focus on your “PITI”. It’s your Pmain (reimburses the amount you borrowed), Iinterest (the loan price), (property) Taxes, and (owners) Iassurance. Our mortgage calculator can help.
Depending on the type of mortgage you have and the amount of your down payment, you may also need to pay for mortgage default insurance. And that can easily reach three digits each month.
But there are other potential costs. You will therefore have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repair and maintenance costs. There is no owner to call in case of a problem!
Finally, you will have a hard time forgetting the closing costs. You can see which are reflected in the Annual Percentage Rate (APR) that will be shown to you. Because it effectively spreads them out over the life of your loan, making it higher than your normal mortgage rate.
But you may be able to get help with those closing costs. and your down payment, especially if you are a first-time buyer. Read:
Down payment assistance programs in each state for 2021
Mortgage rate methodology
Mortgage Reports receive daily rates based on selected criteria from multiple lending partners. We arrive at an average rate and an APR for each type of loan to display in our graph. Because we average a range of rates, it gives you a better idea of what you might find in the market. In addition, we average the rates for the same types of loans. For example, fixed FHA with fixed FHA. The result is a good overview of daily rates and how they have changed over time.