Today’s mortgage and refinance rates 

Average mortgage rates inched just a hint lower yesterday. And conventional loans today start at 3.063% (3.063% APR) for a 30-year, fixed-rate mortgage.

Last week started badly for these rates, with a small rise. But they soon recovered and are slightly lower than they were a week ago.

My best guess is that the next seven days will be similarly good, with mortgage rates again inching lower next week. But nobody can be sure about this stuff.

Find and lock a low rate (Nov 28th, 2020) Find and lock a low rate (Nov 28th, 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?

Depending on the type of mortgage you have, you may be staring at an all-time low. So nobody could blame you for seizing the moment and locking today.

But I probably wouldn’t, unless I were a couple of weeks or less from closing. That’s because I think there may be further small falls ahead. However, those are almost bound to be punctuated by periods of rises that I hope will prove brief and small.

But the rewards of waiting might be modest. And the risk of some stupendous news reversing the trend never goes away.

So the decision may have more to do with your personal appetite for risk than any rational analysis.

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

I still think that the most likely scenario for mortgage rates is that they’ll move slowly and gently lower — with occasional and brief rises. That applies next week and further ahead.

But you shouldn’t rely on my opinion for two reasons. First, unexpected news can emerge at any time. For example, we’ve just had encouraging vaccine announcements on three successive Mondays. And, secondly, investors often perceive reality differently from us regular folk.

Pandemic

It’s hard to overstate how badly the US has been affected by COVID-19. It has killed more than 270,000 Americans and infected 13.4 million. NBC News reported: “More than 1.2 million people in the U.S. contracted Covid-19 in the week leading up to Thanksgiving, close to double the 635,000-plus new cases three weeks before that.”

And those transmission rates (and, later, hospitalization and death rates) will likely soar again following Thanksgiving. More than a million Americans flew for the holiday and many more drove to family gatherings that may well not have practiced social distancing.

Some are optimistic that vaccines will soon reduce the effects of the coronavirus. But, during the week, I quoted management consultancy McKinsey & Co’s forecast for how quickly those might have a meaningful impact:

The positive readouts from the vaccine trials mean that the United States will most likely reach an epidemiological end to the pandemic (herd immunity) in Q3 or Q4 2021.

— McKinsey & Company, When will the COVID-19 pandemic end?, Nov. 23, 2020

And that’s if these vaccines jump through all the regulatory hoops and clear all the logistical hurdles that stand in their paths. As importantly, it relies on sufficient Americans consenting to being inoculated. So we’re not just in for a hard winter, but also for a similarly difficult spring and summer — and perhaps even fall.

Pandemic and the economy

Investors are human too. But when it comes to their professional lives, it’s the economic effects of the pandemic rather than the personal ones that bother them most.

And weekly claims for unemployment insurance have begun rising again in the last two reports. Meanwhile, it’s hard to see how governors’ and mayors’ inescapable anti-coronavirus restrictions won’t soon be feeding through into other aspects of the economy.

Mortgage rates are almost always low during times of economic stress and rise when the nation’s prospering. That’s why I anticipate further falls in rates for the foreseeable future.

Economic reports next week

Friday is the big day on next week’s calendar of economic reports. That’s when the monthly employment situation report is published. Investors often see this as the most important publication of all. And they’ll be looking at the number of jobs created or lost in November, as well as the unemployment rate.

Other important reports include:

• Tuesday — Institute for Supply Management (ISM) purchasing managers index (PMI) for the manufacturing sector
• Wednesday — ADP employment report — Sometimes seen as a bellwether for Friday’s official employment situation report
• Thursday — Weekly new claims for unemployment insurance. Plus the ISM’s PMI for the services sector

Some of these will already be out of date when they’re published. The current wave of COVID-19 infections surged hugely during the second half of November, rendering readings for the first half obsolete.

Find and lock a low rate (Nov 28th, 2020)

Mortgage interest rates forecast for next week

I’m expecting the next seven days to be another 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 some exceptionally good news.

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