Today’s mortgage and refinance rates 

Average mortgage rates fell yesterday, as we predicted. And conventional loans today start at 3.0% (3.0% APR) for a 30-year, fixed-rate mortgage.

Mortgage rates have had a good week. Every day except Thursday saw falls. And, also on Thursday, Freddie Mac called its 13th all-time low of the year.

And I’m hoping for further modest falls next week. But the risk of unforeseen events upending my predictions never goes away.

Find and lock a low rate (Nov 21st, 2020) Find and lock a low rate (Nov 21st, 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?

If you’re anywhere near closing, today could be a great day to lock. Indeed, it might turn out to be the best ever, regardless of your closing date.

However, at the moment, I personally would lock only on a good day when I was about two weeks from closing. That’s because I’m expecting to see further falls in these rates, though only modest ones. But those will almost certainly be punctuated by periods when they edge higher.

Just be aware my expectations may well be proved wrong. And, in any event, the gains are likely to be modest. So you could perfectly legitimately decide to lock today or soon whenever your closing date is.

But, for now, my personal recommendations are:

• 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

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

We don’t see much on the horizon to force mortgage rates appreciably higher. And most of the likely influences we perceive are likely to push them slowly and gently lower — with occasional and brief rises.

But you shouldn’t rely on that scenario for two reasons. First, unexpected news can emerge at any time, such as those recent vaccine announcements. And, secondly, investors often perceive reality differently from us regular folk.

Election

In spite of continuing efforts to question the validity of some election results, most investors have already called the race in their own minds for former Vice President Joe Biden (or President-Elect Joe Biden, if you prefer).

However, they are increasingly aware of problems arising from challenges to the result. Perhaps most importantly, they see them as freezing progress on pandemic stimulus measures. But they’re also concerned about how a disrupted transition might affect the economy, and especially the development of anti-COVID-19 policies.

So far, this has probably helped to keep mortgage rates low. But there may be a brief bump in those rates, caused by relief, if and when the president concedes.

Pandemic

Yes, everyone’s optimistic about Pfizer’s and Moderna’s vaccines. But experts warn that, even if they’re approved this month and others quickly follow, they won’t have a huge effect on the pandemic’s trajectory for many months.

Some of that’s down to delays that are likely to arise in scaling up production. That poses real problems. But then there are logistical challenges in storing and distributing doses. Pfizer’s, in particular, has to be kept for most of its shelflife at -70 degrees Celsius (-94 degrees Fahrenheit). And, finally, there is the difficulty of inoculating hundreds of millions of people, especially as vaccines typically have to be administered in two doses, roughly four weeks apart.

Meanwhile, the pandemic rages. Yesterday, saw 198,537 new cases, according to The New York Times. That figure’s up 67% over the previous 14 days. And hospitalizations (up 50% during that period) and deaths (up 63%) are close behind.

Unsurprisingly, governors, mayors and other officials are responding to these figures with ever-stricter rules on populations and businesses. And those are inevitably having significant economic impacts.

So it would be no surprise were we already in recession. And this is terrible news for everyone — except those who want lower mortgage rates.

Economic reports this week

In theory, markets should be uninterested in this week’s economic reports. After all, who cares what happened in October when the pandemic means it’s totally unrelated to the economy’s performance now?

But that’s unlikely to stop investors from paying attention to this week’s reports. Any that are better than expected could put upward pressure on mortgage rates, while bad news tends to have the opposite effect. Watch out for these two, both of which appear on Wednesday:

• Gross domestic product (GDP) second reading for the third quarter of 2020 — Probably won’t change much. But this is a big one if it does
• Personal spending and income for October — Economists’ consensus forecasts for these are +0.7% and +0.1% respectively

Obviously, no reports are scheduled for the last two days of this week. But enjoy your Thanksgiving break. We’re taking Thursday off. But will be back on Friday.

Find and lock a low rate (Nov 21st, 2020)

Mortgage interest rates forecast for next week

I’m expecting it to be a quietly good week for mortgage rates. Sharp falls or rises seem improbable. And a continuation of the gentle downward trend looks the most likely scenario, barring a concession from President Donald Trump.

But, as is increasingly obvious, there are big and highly unpredictable events in play at the moment. So there are no guarantees.

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 constant as they change.

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. 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 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. 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