Today’s mortgage and refinance rates
Average mortgage rates moved higher yesterday. But that doesn’t tell the story of the week. It was the best seven days for those rates in almost two years, according to Mortgage News Daily.
So I was totally wrong last weekend when I predicted higher rates. But, perhaps too stubbornly, I will repeat my prediction that mortgage rates might rise next week. Stock indexes, which significantly influenced those rates this week, were recovering yesterday. And I’m not yet convinced that we’re seeing a reversal of the strong 2022 upward trend.
Current mortgage and refinance rates
|Conventional 30 year fixed||5.527%||5.55%||+0.11%|
|Conventional 15 year fixed||4.71%||4.743%||+0.1%|
|Conventional 20 year fixed||5.435%||5.472%||+0.1%|
|Conventional 10 year fixed||4.555%||4.615%||+0.03%|
|30 year fixed FHA||5.519%||6.314%||+0.04%|
|15 year fixed FHA||4.98%||5.434%||+0.05%|
|30 year fixed VA||5.125%||5.341%||-0.09%|
|15 year fixed VA||5.471%||5.822%||-0.04%|
|Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions here.|
Should you lock a mortgage rate today?
I’d lock my rate on the first morning when mortgage rates look likely to rise. Recently, that’s been most mornings, though not so this week.
It’s perfectly possible that next week will see a repeat of the last seven days, with mortgage rates falling again. And my reasons for doubting that will be the case are pretty flimsy.
Still, yesterday’s strong recovery in the stock market suggests investors haven’t changed their positions as fundamentally as looked possible earlier in the week.
So, my rate lock recommendations remain:
- LOCK if closing in 7 days
- LOCK if closing in 15 days
- LOCK if closing in 30 days
- LOCK if closing in 45 days
- LOCK if closing in 60 days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your personal tolerance for risk help guide you.
What’s moving current mortgage rates
Yesterday, I explained how the imperfect relationship between stock markets and mortgage rates had been acting for most of last week. Before Friday (when they rose), stock indexes had been falling precipitously for six days. And many investors were using the money they got from selling shares to buy bonds.
Anyone who follows the market snapshots in our daily rates reports will know that the relationship between stock markets and mortgage rates can be so elastic as to be imperceptible. But this week’s rate falls are highly likely to be a result of it.
Some of the bonds they bought were mortgage-backed securities (MBSs), the yields on which largely determine mortgage rates. The extra demand pushed MBS prices higher. And, because it’s a mathematical inevitability that bond prices and yields move inversely, that meant lower MBS yields and mortgage rates.
If you’d like a more technical overview of what happened, read Mortgage News Daily’s Best Week For Rates in Almost 2 Years, But There’s a Catch.
Yesterday’s sharp rises in stock indexes might turn out to be a blip. But it’s at least as likely that the preceding days’ falls were. And we won’t be sure for several days or maybe weeks whether the underlying trends in stocks and mortgage rates have changed.
As so often has been the case over the last six months, we’re back to discussing uncertainty. Personally, I suspect stock markets will maintain the resilience that’s been a strong characteristic of theirs for years. And I reckon mortgage rates are more likely to rise than fall for months to come as inflation continues to run hot.
But those are just gut feelings. And, when it comes to those, yours are as valid as mine.
You might choose to bet on mortgage rates falling. If you do, just be sure you understand the stakes and can afford any losses.
Why weekly rate predictions are the least reliable
Making predictions for mortgage rates each working morning isn’t too hard. Most of that day’s economic data have been published before we post. And our daily snapshot of key markets gives us insights into the mood among investors.
Of course, things can change in the following hours. Sometimes that mood swings or investors’ knee-jerk reaction to a set of data can reverse as they digest the figures. But we’re right more often than you might expect.
Long-term predictions about the direction of the mortgage rate trend also aren’t too hard. You can see the underlying influences and weigh whether they’re likely to gain or lose potency. Again, events will sometimes intervene, but you tend to get it right overall.
Weekly rate predictions are more difficult than either of those. You’re looking too far ahead to rely on markets for clues, but over too short a period for underlying influences to always overwhelm short-term sentiment in markets. This week has been an example of that.
So, be even more skeptical about weekly predictions than the other ones.
Economic reports next week
We’ve already had most of this month’s most important economic reports, which focus on inflation and employment.
But there is one key one next week that might move mortgage rates. And that’s retail sales in April. Because that can tell us about consumer sentiment and how the recovery is holding up.
A few others might move the needle (industrial production, building permits and housing starts) on Tuesday and Wednesday.
The potentially most important reports, below, are set in bold. The others are unlikely to move markets much unless they contain shockingly good or bad data.
- Tuesday — April retail sales. Plus, that month’s industrial production and capacity utilization
- Wednesday — April building permits and housing starts
- Thursday — April existing home sales. Plus weekly new claims for unemployment insurance to May 14
It’s a fairly quiet week, except for Tuesday.
Mortgage interest rates forecast for next week
I hope you read “Why weekly rate predictions are the least reliable,” above. As I said last week, “Don’t take these weekly predictions too seriously.”
With that in mind, I’m going to repeat last week’s prediction, even though it was comprehensively wrong. I suspect mortgage rates next week might rise. I’m just not convinced that those rates have far to fall while inflation’s so hot.
Mortgage and refinance rates usually move in tandem. And the scrapping of the adverse market refinance fee last year has largely eliminated a gap that had grown between the two.
Meanwhile, another recent regulatory change has likely made mortgages for investment properties and vacation homes more accessible and less costly.
How your mortgage interest rate is determined
Mortgage and refinance rates are generally determined by prices in a secondary market (similar to the stock or bond markets) where mortgage-backed securities are traded.
And that’s highly dependent on the economy. So mortgage rates tend to be high when things are going well and low when the economy’s in trouble.
But you play a big part in determining your own mortgage rate in five ways. And you can affect it significantly by:
- Shopping around for your best mortgage rate — They vary widely from lender to lender
- Boosting your credit score — Even a small bump can make a big difference to your rate and payments
- Saving the biggest down payment you can — Lenders like you to have real skin in this game
- Keeping your other borrowing modest — The lower your other monthly commitments, the bigger the mortgage you can afford
- Choosing your mortgage carefully — Are you better off with a conventional, conforming, FHA, VA, USDA, jumbo or another loan?
Time spent getting these ducks in a row can see you winning lower rates.
Remember, they’re not just a mortgage rate
Be sure to count all your forthcoming homeownership costs when you’re working out how big a mortgage you can afford. So focus on your “PITI.” That’s your Principal (pays down the amount you borrowed), Interest (the price of borrowing), (property) Taxes, and (homeowners) Insurance. Our mortgage calculator can help with these.
Depending on your type of mortgage and the size of your down payment, you may have to pay mortgage insurance, too. And that can easily run into three figures every month.
But there are other potential costs. So you’ll have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repairs and maintenance costs. There’s no landlord to call when things go wrong!
Finally, you’ll find it hard to forget closing costs. You can see those reflected in the annual percentage rate (APR) that lenders will quote you. Because that effectively spreads them out over your loan’s term, making that higher than your straight mortgage rate.
But you may be able to get help with those closing costs and your down payment, especially if you’re a first-time buyer. Read:
Down payment assistance programs in every state for 2021
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The result is a good snapshot of daily rates and how they change over time.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.