Today’s mortgage and refinance rates 

Average mortgage rates held steady yesterday. Turns out I was right last Saturday when I predicted that “mortgage rates might rise modestly” this week. But it was a close-run thing.

Since the middle of March, there’s been a pause in 2021’s relentless rises in these rates. Will that end following yesterday’s excellent employment report? Perhaps. But I’m expecting mortgage rates to barely move next week. However, further rises look likely fairly soon.

Find and lock a low rate (Apr 3rd, 2021)

Current mortgage and refinance rates 

Find and lock a low rate (Apr 3rd, 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’d lock my rate as soon as I could if I were buying a home at the moment. That’s because I suspect that the current lull in mortgage rate rises will turn out to be temporary. And I see few grounds for hoping for appreciable falls anytime soon. (More below.)

So my 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

Deciding when to lock your mortgage rate is about probabilities. Nobody knows what’s going to happen in the future. So you have to judge what you think is most likely to occur. And what its impact is likely to be on mortgage rates.

If you want, you can take into account the opinions of commentators like me, who’ve spent years watching mortgage rates on a daily basis. But we’re far from infallible. And the final judgment must be yours.

Right now, in my judgment, I think the most likely scenario is that mortgage rates will continue upward. Of course, they’ll fall and plateau sometimes, occasionally for days at a time. But I believe the overall trend will probably be upward.

My reasons are the same as they have been throughout 2021. Namely, the prospect of an economic recovery and boom. And the fear of future inflation that such a boom brings. Historically, both those have pretty much always brought higher rates.

But, of course, there are alternative scenarios. Suppose a vaccine-resistant variation of the SARS-CoV-2 virus emerges and kills the recovery. Or imagine the effect of a stock market collapse if enough investors decide to prick what some think is a bubble. Both those (and there are others) would likely cause mortgage rates to tumble, perhaps back to new all-time lows.

So we’re back to your judgment of probabilities. How likely are the doomsday scenarios compared to the expected boom? And, more importantly, how likely are they to occur before you have to close?

Economic reports next week

Unusually, we may start next week with a hangover from this week. The hugely important March employment situation report came out yesterday. But most markets were closed for Good Friday and had no chance to react to it. The figures it contained were way better than expected. So Monday may begin badly for mortgage rates.

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

It’s worth noting that, on Wednesday afternoon, the Federal Reserve will publish the minutes of the last meeting of its Federal Open Market Committee. That’s its key policy committee. And investors always study those minutes minutely — and may react to their contents.

Here are next week’s main economic reports:

• Monday — March reports on the services sector from Markit and the Institute for Supply Management (ISM)
• Wednesday — FOMC minutes (see above)
• Thursday — Weekly new claims for unemployment insurance
• Friday — March producer price index. This is a measure of future inflation, which is currently a hot topic

Typically, markets react to unexpectedly good news with higher mortgage rates. You usually see lower rates if figures are bad. But it takes a lot to move them far.

Find and lock a low rate (Apr 3rd, 2021)

Mortgage interest rates forecast for next week

Might the recent lull in mortgage rate rises continue into next week? I think it may. So I’m predicting that mortgage rates might barely budge over the next seven days. But I’m still expecting more rises sometime soon.

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