Today’s mortgage and refinance rates 

Average mortgage rates edged lower yesterday. That’s always welcome news. But it seems to have more to do with directionless drift than an improving outlook.

Still, first thing, mortgage rates again looked likely to edge lower.

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

Current mortgage and refinance rates 

Find and lock a low rate (May 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?

Mortgage rates continue to be becalmed. Recent falls have been helpful. But, on average, they’re still a little higher now than they were at the start of the month.

There may be more falls to come. But, overall, I’m expecting a gentle drift upward in the coming weeks and months. And, eventually, that may turn into a period of sharper rises.

So my personal rate lock 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, I don’t claim perfect foresight. And your personal analysis could turn out to be as good as mine — or better. So you might choose to be guided by your instincts and your personal tolerance for risk.

Market data affecting today’s mortgage rates 

Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:

• The yield on 10-year Treasurys nudged down to 1.58% from 1.62%. (Good for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields, though less so recently
• Major stock indexes were higher on opening. (Bad for mortgage rates.) When investors are buying shares they’re often selling bonds, which pushes prices of those down and increases yields and mortgage rates. The opposite may happen when indexes are lower
• Oil prices rose to $66.36 from $64.77 a barrel. (Bad for mortgage rates*.) Energy prices play a large role in creating inflation and also point to future economic activity. 
• Gold prices held steady at $1,882 an ounce. (Neutral for mortgage rates*.) In general, it’s better for rates when gold rises, and worse when gold falls. Gold tends to rise when investors worry about the economy. And worried investors tend to push rates lower
• CNN Business Fear & Greed index — edged higher to 37 from 35 out of 100. (Bad for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are better than higher ones

Caveats about markets and rates

Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.

So use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, so far mortgage rates today look likely to edge lower. However, be aware that intraday swings (when rates change direction during the day) are a common feature right now.

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

Important notes on today’s mortgage rates

Here are some things you need to know:

1. Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care
2. Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
3. Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the wider trend over time
4. When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
5. Refinance rates are typically close to those for purchases. But some types of refinances are higher following a regulatory change

So there’s a lot going on here. And nobody can claim to know with certainty what’s going to happen to mortgage rates in coming hours, days, weeks, or months.

Are mortgage and refinance rates rising or falling?

Today and soon

Mortgage rates are actually determined by the trading of mortgage-backed securities in a market much like those for other sorts of bonds. And few bond markets seem to have been affected much by the volatility that’s seized stock and cryptocurrency markets.

But for how long can that last? A Wall Street Journal e-newsletter this morning reported:

Bond fund managers remain desperate for government debt that pays attractive returns because yields, which fall when bond prices rise, remain near historic lows in Europe and the U.S.

— WSJ Markets update, May 25, 2021

Right now, those managers are buying foreign bonds in developing countries, which pay higher yields. But those include nations in which the COVID-19 pandemic continues to rampage. So their risks are high. And yet the safe bonds available domestically have yields too low to attract investors.

If and when the Federal Reserve stops artificially keeping those yields low, they’re likely to rise. And mortgage rates should, too.

So it looks to me as if we’re currently playing a waiting game. And, sooner or later, higher mortgage rates are coming.

Mortgage rates and inflation: Why are rates going up?

For more background, check out our latest weekend edition of this report.

Recently

Over much of 2020, the overall trend for mortgage rates was clearly downward. And a new, weekly all-time low was set on 16 occasions last year, according to Freddie Mac.

The most recent weekly record low occurred on Jan. 7, when it stood at 2.65% for 30-year fixed-rate mortgages. But then the trend reversed and rates rose.

However, those rises were mostly replaced by falls in April, though those moderated during the second half of that month. And May has so far seen rises outweighing falls. Freddie’s May 20 report puts that weekly average at 3.0% (with 0.6 fees and points), up from the previous week’s 2.94%.

Expert mortgage rate forecasts

Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector, and mortgage rates.

And here are their current rates forecasts for the remaining quarters of 2021 (Q2/21, Q3/21, Q4/21) and the first quarter of 2022 (Q1/22).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on May 19 and the MBA’s on May 21. Freddie’s forecast is dated April 14. But it now updates only quarterly. So expect its numbers to begin to look stale soon.

Forecaster	Q2/21	Q3/21	Q4/21	Q1/22
Fannie Mae	3.0%	3.1%	3.2%	3.3%
Freddie Mac	3.2%	3.3%	3.4%	3.5%
MBA	3.1%	3.3%	3.5%	3.7%

However, given so many unknowables, the current crop of forecasts might be even more speculative than usual.

Find your lowest rate today

Some lenders have been spooked by the pandemic. And they’re restricting their offerings to just the most vanilla-flavored mortgages and refinances.

But others remain brave. And you can still probably find the cash-out refinance, investment mortgage or jumbo loan you want. You just have to shop around more widely.

But, of course, you should be comparison shopping widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:

Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan.

Verify your new rate (May 25th, 2021)

Mortgage rate methodology