Today’s mortgage and refinance rates 

Average mortgage rates rose yet again yesterday. Thank heavens the rise was much less sharp than Thursday’s. Still, those rates on Friday evening were roughly 10 basis points (a basis point is one-hundredth of 1%) higher than they were a week earlier.

I’m guessing that mortgage rates next week will rise further. But with so much new volatility that really is a guess.

Find and lock a low rate (Sep 25th, 2021)

Current mortgage and refinance rates 

Find and lock a low rate (Sep 25th, 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?

Yes, I’d suggest that you lock your mortgage rate very soon. Of course, there will be ups and downs in the coming days and weeks.

But the forces lined up against low mortgage rates look to me to be much stronger and more likely to succeed than the ones that might push them lower. (Read on for my reasons.)

So my personal 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 be guided by your gut and your personal tolerance for risk.

What’s moving current mortgage rates

Last week, I reported that rates for 30-year, fixed-rate mortgages climbed by 10 basis points over the previous seven days, according to Mortgage News Daily’s (MND’s) archives. And this week they did the same, rising altogether to 3.13% from 2.93% in nine calendar days.

We may be able to call this a rising short-term trend. But it’s not one that’s long enough established to draw inferences from.

Reason for the rise

Most commentators are happy to ascribe recent rises to the last meeting of the Federal Reserve’s monetary policy body, the Federal Open Market Committee (FOMC). That ended on Wednesday with the publication of a statement and the hosting of a news conference. Read 2% Mortgage rates could disappear “soon,” per Fed meeting for the lowdown on that.

And those commentators are right that the principal driver for higher rates was likely those Fed events. But there were others, perhaps most notably the unexpected slowdown in COVID-19 infection rates.

The New York Times (paywall) reported that during the 14 days ending on Sept. 24, the number of new cases in the US tumbled by 16%. And they were down 14% worldwide over that period.

This is a big thing for markets. One of the reasons mortgage rates have been so low is that investors have been buying mortgage-backed securities (MBSs — a type of bond that largely determines those rates) to hedge against the economic consequences of the pandemic. And, as fears subside, they’re likely to sell some of their MBSs, driving up rates.

Meanwhile, there’s another factor that might push up mortgage rates further. And that’s the political row that’s brewing on Capitol Hill over the debt ceiling. If that’s not resolved within a matter of weeks, the US government will default on its debts for the first time in history. And that will almost certainly make all forms of borrowing (including mortgages) more expensive.

Might mortgage rates fall back again?

Of course, it’s possible that mortgage rates might yet fall. But it’s looking increasingly unlikely.

True, it’s inevitable that they’ll both rise and fall on some days. And we may have longer patches of falls.

But I doubt we’ll get close to 2021 lows, no matter what happens to the pandemic. Well, almost no matter what. A new, ultra-virulent and highly infectious SARS-CoV-2 variant that forces long-term lockdowns globally might well bring mortgage rates to new all-time lows. But let’s hope that’s unlikely.

As are other possible triggers of sustained, lower mortgage rates. They range from war to uber-serious natural disasters and beyond. Yes, possible. But not likely.

And weighing possible risks and rewards are what deciding when to lock your mortgage rate is all about. Yes, you might get it wrong because none of us can see into the future. But that weighing process is more likely to serve you well than acting blindly. And it makes it easier to enjoy or live with the consequences of your decision later.

Economic reports next week

There are a couple of important economic reports next week, with Friday bringing the key ones. But I’m guessing their impact will be barely noticeable among the aftershocks of the Fed meeting, the noise of the debt ceiling row and the better outlook for COVID-19.

None of the other economic reports listed below is likely to cause much movement in markets unless it includes shockingly good or bad data:

• Monday — August orders for durable and capital goods
• Tuesday — July S&P Case-Shiller home price index and September consumer confidence index
• Thursday — Weekly new claims for unemployment insurance to Sept. 25
• Friday — August core inflation along with real disposable income and real consumer spending. Also, August construction spending. Plus September Institute for Supply Management (ISM) manufacturing index. And the consumer sentiment index for September

There’s a lot happening on Friday. But will investors notice against all the background noise?

Find and lock a low rate (Sep 25th, 2021)

Mortgage interest rates forecast for next week

My best guess is that mortgage rates will rise again this week but probably only moderately. But, given recent volatility, that genuinely is only a guess.

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.

And another regulatory change, announced this week, 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.

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