Today’s mortgage and refinance rates 

Welcome to the new weekend edition of our rates report and forecast. Average mortgage rates inched higher yesterday. And conventional loans today start at 2.625% (2.625% APR) for a 30-year, fixed-rate mortgage.

Since Election Day, mortgage rates have been shadowing the markets they normally follow much less closely than usual. And that’s just as well. Because they’d be higher if they were still tracking 10-year Treasury yields and stock markets. But that could see some lenders adjusting their rate cards a little higher later today or come Monday morning.

Find and lock a low rate (Nov 7th, 2020) Find and lock a low rate (Nov 7th, 2020)

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?

When you lock often depends on when you close. If you’re nearing the time when you have to lock, you might benefit from doing so quickly. There’s often a bump once a presidential race is called. But that may not last long this time.

And, once things are back to normal, I believe mortgage rates are likely to carry on inching lower, though only slowly and unsteadily. But I also think that those falls will be punctuated by occasional, brief and modest rises.

But my belief may well be overtaken by events. Still, in the absence of better information, my personal recommendations must for now remain:

• LOCK if closing in 7 days
• LOCK if closing in 15 days
• FLOAT if closing in 30 days
• FLOAT if closing in 45 days
• FLOAT if closing in 60 days

But, 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

Election

It’s the continuing presidential election count that’s mostly moving mortgage rates. However, Friday’s better-than-expected employment numbers also moved the needle that day.

By the time you read this, that race may well have been called. And most political experts expect former Vice President Joe Biden to win. True, nothing’s certain until the votes have been counted and eventually certified. But the math currently seems to be on Mr. Biden’s side in four key states. And he’d win the White House if he were the victor in Pennsylvania or any two of the other three.

But, of course, President Donald Trump is unlikely to go down without a fight. He’s launching legal challenges in several battleground states and will request recounts where that’s an option. True, his chances of success in those efforts currently look slim. But it’s not over until it’s over.

This uncertainty helped mortgage rates to new lows (for purchase mortgages but not refinances) last week. But the end of that uncertainty may see them rise again, at least assuming the outcome doesn’t trigger widespread unrest. Chances are, all the big networks agreeing on a winner would be enough for investors to regard the matter as closed.

Pandemic

So we may well see a bump in rates next week. But that may not last as long as usual. Why? Well, the COVID-19 pandemic is screaming out for investors’ attention, because a second wave is pretty much bound to wreak economic havoc.

And that second wave looks to be crashing over us already. Deaths are up 12% over the last two weeks, according to The New York Times. And, owing to the lag between catching the disease and dying, they look set to rise even more quickly. Because the US set increasingly bad records for new infections on Wednesday, Thursday and (at 132,797) Friday.

So, once investors switch focus from the election, they might soon have to address the pandemic. And that could drive mortgage rates even lower.

Economic reports this week

There’s little on the calendar of economic reports that’s likely to create waves in markets. Thursday’s new claims for unemployment insurance might, as could Friday’s consumer sentiment index. But investors may have other things to distract them by then.

Also on Thursday and Friday are various inflation and prices numbers. But they rarely shock.

Find and lock a low rate (Nov 7th, 2020)

Mortgage interest rates forecast for next week

So, in summary, we’re still in highly unpredictable territory. Personally, I’m expecting a moderate and brief increase in rates when the election’s called.

But I suspect that might not last once the implications of the pandemic’s new surge dawn on investors.

Still, with so much going on, I may be proved wrong.

Mortgage and refinance rates usually move in tandem. But note that refinance rates are currently a little higher than those for purchase mortgages. That gap’s likely to remain the same as they change.

How your mortgage interest rate is determined

Mortgage and refinance rates are generally determined by prices in a secondary market (like 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. You can affect it significantly by:

1. Shopping around for your best mortgage rate — They vary widely by 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 mortgage you can afford
5. Choosing your mortgage carefully — Are you better off with a conventional, FHA, VA, USDA, jumbo or other 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.

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. Those will be 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 2020

Mortgage rate methodology