Today’s mortgage and refinance rates 

Average mortgage rates moved lower again yesterday, ending the week appreciably below where they started it. They’re still above 3% for most loans. But they’re heading in the right direction.

I’ve been predicting higher rates for the last couple of weeks and have been proved comprehensively wrong. I still think recent falls have been a blip in a much longer upward trend. But it’s been quite a blip. And I can’t be sure how long it will last.

Still, I’ll stick my neck out and say that I think mortgage rates might rise next week, partly buoyed by the passage of the stimulus bill and some great employment data.

Find and lock a low rate (Nov 6th, 2021)

Current mortgage and refinance rates 

Find and lock a low rate (Nov 6th, 2021)

Should you lock a mortgage rate today?

You might wish to wait until next week to see if mortgage rates continue to fall before locking. But you should be ready to push the button at any moment.

The forces aligned to push those rates higher are powerful. And I remain convinced that mortgages will soon become more costly again.

But I have to admit that markets aren’t reacting as I anticipated to recent events. And, if this goes on much longer, I may have to revise my advice.

But, for now, 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

It wasn’t a huge surprise that Wednesday’s big announcement by the Federal Reserve didn’t cause a spike in mortgage rates. This time last week, I wrote, “I’m expecting that Wednesday announcement to be a bit of a damp squib … the pain’s been spread and the worst of it may be behind us already.”

Sure enough, those rates rose modestly that day. What I wasn’t expecting was for them to fall on Thursday and Friday.

And that was doubly true for Friday. Because that day’s jobs report was much better than expected. Normally, investors would greet that news by pushing mortgage rates higher before jumping on their yachts for the weekend and popping Champagne corks.

So what’s happening?

Mortgage News Daily has a theory to explain what’s going on. It’s one that had occurred to me but that I considered doubtful. But maybe I was wrong.

And it’s all to do with the Bank of England (BoE), the UK’s central bank, and its equivalent of our Fed. It met on Thursday, the day after the Fed meeting. And it, too, had clearly signaled its intentions in advance.

However, in its case, it had let it be known that it would be increasing its interest rates. But it didn’t. On the day, it left them unchanged at 0.1%. The pound (Britain’s currency) dropped and so did yields on UK Treasury bonds (“gilts”).

Those gilts are the equivalent of our US Treasury bonds. And there’s usually a close relationship between yields on 10-year US Treasury notes and American mortgage rates.

So was that it? Did mortgage rates fall on Thursday and Friday as a result of the BoE’s inaction? Maybe. Central banks certainly influence one another. And global investors can shop around for their bond purchases. So it’s easy to understand some level of contagion between national markets.

But this much? Who knows? I’ve nothing better.

Other upward pressures

Meanwhile, all the forces I usually mention continue to try to push mortgage rates higher:

1. Inflation — We’ll get the latest figures next week. But there’s little sign of inflation slowing. And that pretty much always brings higher rates
2. Falling COVID-19 infection rates — Daily infection rates have tumbled to 71,617 yesterday from 285,058 on Sept. 13. This fall takes an important brake off the economic recovery. And a thriving economy means higher mortgage rates
3. The Fed — After 19 months of keeping mortgage rates artificially low, the Fed finally announced on Wednesday that it would begin to reduce its support. And it’s slashing its monthly purchases of mortgage bonds from $40 billion by $5 billion each month. Until it reaches zero in mid-2022. That’s likely to hurt as time goes by

And now there’s a fourth driver of higher rates. Until yesterday, low employment was the fly in the ointment for the economic recovery. But Friday’s report was excellent. So that recovery looks more assured.

And, of course, President Joe Biden’s $1 trillion infrastructure plan was finally passed by Congress yesterday. And that’s highly likely to drive the recovery faster and further.

Economic reports next week

This week’s economic reports largely focused on employment. And next week’s are mostly about inflation.

As we discussed above, inflation is one of the big drivers of higher mortgage rates. And if next week’s data shows it moderating appreciably, we may see those rates fall But, if those numbers show the same or higher inflation, expect more expensive mortgages.

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 — October producer price index for final demand (future inflation)
• Wednesday — October consumer price index (CPI) plus core CPI, which is the CPI with volatile food and energy prices stripped out. Plus weekly new claims for unemployment insurance to Nov. 6
• Thursday — Markets closed for Veterans Day holiday
• Friday — September job openings and November consumer sentiment index

Wednesday’s the big day next week.

Find and lock a low rate (Nov 6th, 2021)

Mortgage interest rates forecast for next week

Yet again, I think that mortgage rates might rise next week. If they don’t, that will make three weeks in a row when I’ve got that prediction wrong.

But I find it hard to believe that markets won’t react to the passing of the $1 trillion infrastructure plan and to better employment news, though the latter would be a delayed reaction.

Of course, I can’t be certain about that. But I’m pretty sure mortgage rates will resume their upward trend sometime soon.

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 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.

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