Today’s mortgage and refinance rates 

Average mortgage rates nudged higher last Friday. And conventional loans today start at 2.75% (2.75% APR) for a 30-year, fixed-rate mortgage. 

That Friday rise was probably connected to increased investor optimism over talks to come up with a stimulus package. We warned that day of that scenario potentially unfolding. Those talks are continuing. However, serious issues remain to be settled. And it’s far from clear that any measures will be enacted this side of the election.

Bond markets are closed for Columbus Day today. So rates are unlikely to move beyond some lenders that are open catching up on housekeeping.

Current mortgage and refinance rates 

Find and lock a low rate (Oct 12th, 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?

Are we set to see an end to the monthslong downward trend in mortgage rates? The answer’s somewhere between possibly and probably.

Yes, the Federal Reserve has made clear that it will continue to help keep these rates low by buying huge quantities of mortgage bonds.

But even it may not be able to resist investor sentiment that would likely want them higher if any of the following occur:

1. Enactment of significant stimulus measures around the $2 trillion mark
2. A “blue sweep” (Democrats winning control of the executive and legislature) on Election Day — Perhaps surprisingly, Wall Street increasingly thinks the economy would do better in that situation. And a good economy’s bad for mortgage rates
3. The emergence of a vaccine of proven safety and efficacy

Of course, as long as none of those happens, mortgage rates may continue on their gently downward path. But do you want to roll the dice?

Absent those, my personal recommendations remain:

• 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

But, 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 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 last Friday morning, were:

• The yield on 10-year Treasurys inched up to 0.78% from 0.77%. (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 moderately 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 happens when indexes are lower
• Oil prices fell to $40.06 from $40.86 a barrel. (Good for mortgage rates* because energy prices play a large role in creating inflation and also point to future economic activity.) 
• Gold prices rose to $1,929 from $1,923 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 nudged up to 60 from 58 out of a possible 100 points. (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

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. Today, they’re looking quiet for mortgage rates. With bond markets closed, little should change. But, if there’s momentous news later, you have a chance lock ahead of rises, assuming your lender’s open for business.

Find and lock a low rate (Oct 12th, 2020)

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 (at least $1 trillion; some say nearly $2 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 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. At times of high demand, lenders can push up rates as a way of managing their workflow. Neither markets nor the Fed can help when that happens

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?

Over the last few months, the overall trend for mortgage rates has clearly been downward. A new all-time low was set early in August and we’ve gotten close to others since. Still, a new one remains a real possibility.

But such a new low is far from a given. See “Should you lock a mortgage rate today?” (above) for reasons they may go higher.

It all depends on countless variables, most of which are unknowable.

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 last quarter of 2020 (Q4/20) and the first three of 2021 (Q1/21, Q2/21 and Q3/21).

Note that Fannie’s (published Sept. 15) and the MBA’s (Sept. 21) are updated monthly. However, Freddie’s are now published quarterly. The last was released on June 8 and the next was, presumably, due in September.

But, as of the morning of Oct. 12, there’s still no sign of it. So Freddie’s feel stale. And we may pull its entry in the following table if there isn’t an update soon.

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

So expectations vary considerably. You pays yer money …

Find your lowest rate today

Everyone — from federal regulators to personal finance gurus — agrees that shopping around for your new mortgage or refinance is important. You could save thousands over just a few years by getting quotes from multiple lenders. And more, if you keep your mortgage for a long time or have a large loan.

But you’ve rarely had more to gain by shopping around than you do now. The mortgage market is currently very messy. And some lenders are offering appreciably lower rates than others. Worse, some are making it harder to get any mortgage at all if you want a cash-out refinance, a loan for an investment property, a jumbo loan or if your credit score is damaged.

So start shopping around soon for your new mortgage or refinance. You’re most likely to find a great deal on the type of loan you want if you spread your net widely.

Mortgage rate methodology