Today’s mortgage and refinance rates 

Average mortgage rates nudged lower yesterday. But the week’s rises and falls have canceled each other out. And Friday evening’s average rate was precisely the same as the previous Friday evening’s one, based on Mortgage News Daily numbers.

And mortgage rates next week may also change very little. Yes, there will be the usual ups and downs. But rates may well go nowhere. Of course, there’s always a possibility of some unforeseen event arising that disrupts this tranquillity and moves these rates decisively.

Find and lock a low rate (Aug 28th, 2021)

Current mortgage and refinance rates 

Find and lock a low rate (Aug 28th, 2021)

COVID-19 mortgage updates: Mortgage lenders are changing rates and rules due to COVID-19. To see the latest on how coronavirus could impact your home loan, click here.

Should you lock a mortgage rate today?

Absent something unexpected, it’s looking likely that August will end with mortgage rates a bit higher than when it started. But movements in recent weeks have been gentle and directionless. So you probably haven’t lost or gained much by floating your rate.

But the risks of continuing to do so remain real. Because nearly all experts are forecasting smaller or larger rises overall. Trouble is, nobody knows when.

So my personal recommendations remain:

• LOCK if closing in 7 days
• LOCK if closing in 15 days
• LOCK if closing in 30 days
• FLOAT if closing in 45 days
• FLOAT 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 be guided by your gut and your personal tolerance for risk.

What’s moving current mortgage rates

So, mortgage rates remain becalmed. They continue to drift up and down but barely move when measured over weeks.

And, this week, they dodged a bullet when Federal Reserve Chair Jerome Powell’s speech yesterday revealed nothing new. He confirmed that the Fed would begin to slow and later stop (“taper”) its efforts to keep mortgage rates artificially low later this year. But everyone already knew that.

And regular readers will be relieved that I can finally stop rabbiting on about tapering every day. However, the issue hasn’t gone away and will return in a few weeks.

In the meantime

In the meantime, mortgage rates will be affected by economic news. But this, too, is a less straightforward relationship than it usually is.

During normal times, mortgage rates rise on good economic news and fall on bad. But that’s not always the case at the moment.

Take next Friday’s employment situation report as an example. This is often the most influential of all monthly economic reports, rivaled sometimes only by inflation ones. And a great report on Friday (lots more jobs and higher average hourly earnings) would normally push mortgage rates higher.

But it may not this time. Because investors still have one eye on the Fed. And great employment data might bring forward the dates when it stops keeping mortgage rates and Treasury yields low — and hasten the time when it begins to hike its own interest rates.

So some investors view good economic news as damaging to their interests because it potentially hastens the end of the Fed’s easy-money policies. And they’re enjoying that particular party.

The Fed remains unlikely to hike its rates until well into 2022 or possibly sometime in ’23. And it’s important to differentiate between the Fed’s own interest rates and mortgage rates. A change in Fed rates tends to directly influence rates on variable-rate loans, including credit cards, auto loans and others. But mortgage rates are determined differently and largely independently of the Fed (see below for details).

Economic reports next week

Please see the last few paragraphs for information about next week’s major economic report, Friday’s employment one. It’s hard to overestimate how influential this can be.

None of the other economic reports listed below is likely to cause much movement in markets unless it includes shockingly good or bad data. Moreover, regular readers will know that investors have been ignoring most economic reports in recent months. So the effects of the following may be different from usual:

• Tuesday — August consumer confidence index
• Wednesday — August ADP employment report (private-sector jobs) and Institute for Supply Management (ISM) manufacturing index. Plus July construction spending
• Thursday — Weekly new claims for unemployment insurance to Aug. 28. Plus factory orders in July
• Friday — August employment situation report, comprising nonfarm payrolls, unemployment rate and average hourly earnings. Plus ISM services index, also for August

Yet again, it’s Friday that’s the big day.

Find and lock a low rate (Aug 28th, 2021)

Mortgage interest rates forecast for next week

Now that tapering is out the way (for a few weeks), I can see little reason to expect sharp changes in mortgage rates anytime soon. And I suspect that mortgage rates next week will be unchanged or barely changed.

Mortgage and refinance rates usually move in tandem. And a gap that had grown between the two has been largely eliminated by the recent scrapping of the adverse market refinance fee.

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.

Your part

But you play a big part in determining your own mortgage rate in five ways. And you can affect it significantly by:

1. Shopping around for your best mortgage rate — They vary widely from lender to lender
2. Boosting your credit score — Even a small bump can make a big difference to your rate and payments
3. Saving the biggest down payment you can — Lenders like you to have real skin in this game
4. Keeping your other borrowing modest — The lower your other monthly commitments, the bigger the mortgage you can afford
5. Choosing your mortgage carefully — Are you better off with a conventional, FHA, VA, USDA, jumbo or another loan?

Time spent getting these ducks in a row can see you winning lower rates.

Remember, it’s 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) you’ll be quoted. 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 your down payment, especially if you’re a first-time buyer. Read:

Down payment assistance programs in every state for 2021

Mortgage rate methodology