Today’s mortgage and refinance rates 

Average mortgage rates fell yesterday. But only by the smallest measurable amount. Still, that was a surprise because earlier in the day they’d looked likely to rise.

I’m still not clear what’s causing this extended lull in mortgage rate rises. And the several theories I’ve already reported don’t really explain why it’s lasting so long. So I can’t make a forecast for the coming seven days. And instead have to say mortgage rates next week are unpredictable.

Find and lock a low rate (Apr 10th, 2021)

Current mortgage and refinance rates 

Find and lock a low rate (Apr 10th, 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?

I can’t in all conscience recommend floating your rate beyond saying you might prefer to wait to lock until mortgage rates begin rising again. But there’s a risk with that: They may climb sharply when (OK, if) the 2021 upward trend resumes. So you need to be ready to lock the moment that happens.

And my overall 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

To be candid, I’m surprised and puzzled that mortgage rates have been falling in April. Of course, occasional and brief drops are to be expected. But this one seems to be lasting.

And I’m yet to find a convincing explanation for it in the financial press. Why are bonds not responding to economic reports in the way they usually do? For example, mortgage rates would normally have risen on publication of yesterday’s producer price index — as well as excellent data from earlier in the week. It doesn’t make sense.

Unless, that is, the Federal Reserve is buying whole piles of mortgage-backed securities — the bonds that determine mortgage rates — as part of its asset purchasing program. We’ll find out soon.

Meanwhile, my belief that mortgage rates will soon have to rise further remains unshaken. Because, assuming economists are right about the high rate of gross-domestic-product (GDP) growth they’re expecting this year, that seems inevitable. To persuade me otherwise, you’d have to show me some booming economies in history where interest rates haven’t climbed.

Naturally, it’s always possible that the economic recovery will be derailed. But it seems much more likely that the boom will pull into the station pretty much on schedule.

Economic reports next week

As just discussed, bond markets are not responding to the positive economic data they’ve been receiving in the way they normally do. Indeed, the opposite is the case. So bear that in mind when considering next week’s economic reports.

Those include two big ones. Firstly, Tuesday brings the March consumer price index (CPI) and core CPI (CPI excluding food and energy prices). Markets are especially sensitive to news about inflation at the moment. And second are retail sales figures, also for March, which are due out on Thursday. Those could indicate whether the recovery is proceeding as expected.

Most of the other reports next week are relatively unimportant. And markets may well shrug them off. However, even minor reports can move markets if they contain unexpected news.

Here are next week’s main economic reports:

• Tuesday — March CPI and core CPI
• Thursday — March retail sales. Plus weekly new claims for unemployment insurance. Also March industrial production and capacity utilization
• Friday — March housing permits and housing starts

Typically, markets react to unexpectedly good news with higher mortgage rates. You usually see lower rates if figures are bad. But that’s not necessarily been the case recently. And it takes a lot to move them far.

Find and lock a low rate (Apr 10th, 2021)

Mortgage interest rates forecast for next week

Mortgage rates are essentially unpredictable at the moment. Yes, I’m still expecting more rises sometime soon. But when they turn up is anyone’s guess.

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 fairly constant as they change.

Meanwhile, a recent regulatory change has made most mortgages for investment properties and vacation homes more expensive.

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 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