Today’s mortgage and refinance rates 

Average mortgage rates edged up yesterday. But they remain very close to their all-time low.

Mortgage rates might rise sharply today. How sharply and for how long is anyone’s guess. But we may be at a tipping point. Read on for details.

Find and lock a low rate (Jan 7th, 2021)

Current mortgage and refinance rates 

Find and lock a low rate (Jan 7th, 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?

Yes, you should lock your mortgage rate today, certainly if you’re closing in January and possibly if you’re doing so later. Because today might be the start of a series of sharp rises in those rates.

And the chances of them not jumping currently look slim. But they do exist. Personally, I wouldn’t take that wager by continuing to float my rate. But you may legitimately choose to do so.

Senate runoffs

What’s changed? Well, it’s looking increasingly likely that both Democratic candidates will win yesterday’s Senate runoffs in Georgia. And that would flip control of the upper house, giving their party a clean sweep across Capitol Hill and the White House. (At the time this was written, only one seat has been called; the other is too close to call but the Democratic candidate leads.)

If that clean sweep happens, most expect a much larger requirement for government debt (US Treasury bonds). That will be needed to fund more generous pandemic relief, health insurance assistance, infrastructure projects and other spending programs.

Bond yields and mortgage rates to rise

And that greater supply of Treasurys will likely see their prices fall and their yields rise. But that will affect other types of bonds, including mortgage-backed securities, the trade in which actually determines mortgage rates.

So strap in for appreciably higher mortgage rates. True, the economic harm caused by the pandemic may provide some downward force on them. But nobody knows for sure what the effects will be or how long they’ll last.

Perhaps I’m being too pessimistic about the medium-term impact of today’s likely election result. And I may be proved completely wrong. But, for now, I’m changing my personal rate lock recommendations:

• 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

Still, 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.

Market data affecting today’s mortgage rates 

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

• The yield on 10-year Treasurys soared to 1.04% from 0.94%. (Very bad 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 mixed on opening. (Neutral 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 happens when indexes are lower
• Oil prices rose to $50.03 from $49.31 a barrel. (Bad for mortgage rates* because energy prices play a large role in creating inflation and also point to future economic activity.) 
• Gold prices edged lower to $1,936 from $1,949 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 — Inched up to 57 from 55 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. The Fed is now a huge player and some days can overwhelm investor sentiment.

So use markets only as a rough guide. They have to be exceptionally strong (rates are likely to rise) or weak (they could fall) to rely on them. But, with that caveat, so far they’re looking likely to move significantly higher today.

Find and lock a low rate (Jan 7th, 2021)

Important notes on today’s mortgage rates

Here are some things you need to know:

1. The Fed’s ongoing interventions in the mortgage market (way over $1 trillion) should put continuing downward pressure on these rates. But it can’t work miracles all the time. So expect short-term rises as well as falls. And read “For once, the Fed DOES affect mortgage rates. Here’s why” if you want to understand this aspect of what’s happening
2. 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
3. Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
4. 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
5. When rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
6. Refinance rates are typically close to those for purchases. But some types of refinances from Fannie Mae and Freddie Mac are currently appreciably 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

I’m expecting mortgage rates to rise significantly today.

It’s unlikely that anything besides the Senate runoffs will trouble investors today. Democratic candidate Raphael Warnock has already been declared the winner in his race.

And Jon Ossoff (D) was leading David Perdue (R) by 16,370 votes in the other when this was written. Analysts suggest that — given the political complexion of the counties in which some votes are yet to be counted — Mr. Ossoff is likely to increase that lead. We should know more by lunchtime in Georgia. And, if he does indeed win, that would flip the US Senate.

At the moment, Mr. Ossoff has a 0.4% lead. And he would need a 0.5% one to avoid a recount. But, even if he gets that, there may be legal challenges ahead, and the postal service has until Friday to deliver the last of up to 17,000 postal votes, including military ones and those from overseas.

However, investors are already acting as if Democratic wins are nearly certain. And mortgage rates are likely to jump today — barring some dramatic change in the races’ fortunes.

Recently

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

The most recent such record occurred on Dec. 24. And on New Year’s Eve Freddie reported its weekly average was imperceptibly higher (one-hundredth of 1%) than the previous week.

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 each quarter of 2021 (Q1/21, Q2/21, Q3/21 and Q4/21).

However, note that Fannie’s (released on Dec. 15) and the MBA’s (Dec. 21) are updated monthly. But Freddie’s are now published quarterly. And its latest was released on Oct. 14. So that’s looking distinctly stale.

The numbers in the table below are for 30-year, fixed-rate mortgages:

Forecaster	Q1/21	Q2/21	Q3/21	Q4/21
Fannie Mae	2.7%	2.7%	2.8%	2.8%
Freddie Mac	3.0%	3.0%	3.0%	3.0%
MBA	2.9%	3.0%	3.2%	3.2%

So predictions vary considerably. You pays yer money …

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 (Jan 7th, 2021)

Mortgage rate methodology