Today’s Mortgage and Refinance Rates
Average mortgage rates rose significantly on Thursday (markets were closed for Good Friday yesterday). Overall, these rates rose last week, thanks to strong increases on Monday and Thursday. But falls on Tuesday and Wednesday blunted those increases.
Just like last week, I’ll predict that mortgage rates could rise next week. But, like last week, there is too much uncertainty and volatility in the markets for that to be much more than a guess.
Current mortgage and refinance rates
|30-year fixed conventional||5.348%||5.374%||+0.02%|
|15-year fixed conventional||4.516%||4.546%||+0.03%|
|20-year fixed conventional||5.279%||5.318%||Unchanged|
|10-year fixed conventional||4.531%||4.602%||Unchanged|
|30-year fixed FHA||5.202%||6.019%||Unchanged|
|15-year fixed FHA||4.697%||5.153%||+0.03%|
|30-year fixed PV||4.891%||5.105%||Unchanged|
|15-year fixed VA||4.505%||4.847%||Unchanged|
|Pricing is provided by our partner network and may not reflect the market. Your rate may be different. Click here for a personalized quote. See our rate assumptions here.|
Should you lock in a mortgage rate today?
I would lock in my rate on the first morning when mortgage rates look likely to rise. Recently it was most mornings.
Unfortunately, I remain pessimistic about mortgage rates. And I think they will probably continue to rise for some time to come. With luck, the rate at which they are increasing may soon begin to slow. But I see few signs of sustained declines in the coming months.
Of course, I could be wrong. But I think it’s much more likely that they will continue higher than they will fall for more than a few days at a time.
So my personal rate lock recommendations remain:
- LOCK if closing 7 days
- LOCK if closing 15 days
- LOCK if closing 30 days
- LOCK if closing 45 days
- LOCK if closing 60 days
However, with so much uncertainty right now, your instincts could easily turn out to be as good as mine, or even better. So let your instincts and personal risk tolerance guide you.
What’s Moving Current Mortgage Rates
So far in 2022, major markets have struggled to stay ahead of the Federal Reserve’s plans to contain inflation. These markets always try to anticipate events rather than waiting for them to happen.
And the two main tools available to the Fed will almost inevitably drive mortgage rates up.
Of course, the Fed has barely begun to implement these plans. Its only move so far has been a slight hike in the fed funds rate, which affects variable-rate borrowing but only has an indirect impact on new mortgage rates.
But the Fed stepped up its rhetoric, signaling its willingness to make more and bigger rate hikes. And it is also pre-announced plans, which should be unveiled on May 4, to reduce its bond holdings.
These holdings include $2.74 trillion in mortgage-backed securities (MBS), the type of bond that largely determines mortgage rates. And it is how aggressively the Fed will reduce its holdings of MBS that markets are now trying to price in.
Of course, it is possible that May 4 will bring a pleasant surprise and that the Fed will reveal only modest plans. This could lead to lower mortgage rates.
But I fear the plans are much more likely to be as bad or worse for mortgage rates than the markets fear. And that could push those rates even higher. Certainly, very aggressive plans would better match the Fed’s recent hawkish rhetoric.
Differences of opinion
Of course, not everyone agrees with me. On Wednesday, the Mortgage Bankers Association (MBA) released its latest forecast for mortgage rates. And he expects 30-year fixed-rate mortgages to average 4.7% in the current quarter (April-June). This would mean that these rates would fall from their current levels.
But I suspect even the MBA would concede that it has been too optimistic in its recent forecasts. In January, he predicted that those mortgage rates would average 3.5% in the current quarter.
It’s not to embarrass the MBA. That same month, Fannie Mae predicted that rate would be 3.3% this quarter. And, at the same time, Freddie Mac thought 3.6%. All of these numbers show how incredibly difficult it is to make accurate forecasts in today’s environment.
Economic reports next week
Unless you work in construction or real estate, next week’s economic reports could be quite boring.
The potentially most important reports below are highlighted in bold. The others are unlikely to move the markets much unless they contain surprisingly good or bad data.
- Monday – April National Home Builders Association Home Builders Index
- Tuesday — March Building permits and housing starts
- Wednesday — March Sales of existing houses
- Thursday — March leading economic indicators. Plus new weekly unemployment insurance claims through April 16
- Friday — April purchasing managers index (PMI) from S&P (Markit) for the manufacturing and services sectors
Next week’s economic reports are unlikely to affect mortgage rates much.
Mortgage interest rate forecast for next week
I will continue to predict that mortgage rates could rise next week. But don’t take these weekly suggestions too seriously. Amid the current volatility, my success rate has more to do with luck than judgment.
Mortgage and refinance rates generally move in tandem. And the removal of unfavorable market refinancing charges last year has largely eliminated the gap that had grown between the two.
Meanwhile, another recent regulatory change has likely made mortgages for investment properties and vacation homes more accessible and less expensive.
How your mortgage interest rate is determined
Mortgage and refinance rates are typically determined by prices in a secondary market (similar to stock or bond markets) where mortgage-backed securities are traded.
And it depends heavily on the economy. Thus, mortgage rates tend to be high when things are going well and low when the economy is struggling.
But you play an important role in determining your own mortgage rate in five ways. And you can affect it significantly by:
- Shop around for your best mortgage rate – They vary widely from lender to lender
- Boost your credit score – Even a small bump can make a big difference to your rate and payments
- Save the biggest down payment possible – Lenders like you to have real skin in this game
- Keep your other borrowings small — The lower your other monthly commitments, the higher the mortgage you can afford
- Choose your mortgage carefully – Are you better off with a conventional, conforming, FHA, VA, USDA, jumbo or other loan?
Time spent getting these ducks in a row can earn you lower rates.
Remember it’s not just a mortgage rate
Be sure to factor in all of your homeownership costs when calculating how much mortgage you can afford. So focus on your “PITI”. It’s your Pprincipal (repays the amount you borrowed), IInterest (the price of the loan), (the property) Jaxes, and (owners) Iassurance. Our mortgage loan calculator can help you.
Depending on your type of mortgage and the amount of your down payment, you may also need to pay for mortgage insurance. And that can easily hit three figures every month.
But there are other potential costs. So you will have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repair and maintenance costs. There is no owner to call when things go wrong!
Finally, you will have a hard time forgetting closing costs. You can see those reflected in the annual percentage rate (APR) that lenders will quote you. Because it spreads them effectively over the term of your loan, making it higher than your normal mortgage rate.
But you may be able to get help with those closing costs. and your down payment, especially if you are a first-time buyer. Lily:
Down payment assistance programs in every state for 2021
Mortgage Rate Methodology
Mortgage reports receive daily rates based on selected criteria from multiple lending partners. We arrive at an average rate and APR for each loan type to display in our chart. As we calculate the average of a range of prices, it gives you a better idea of what you might find in the market. In addition, we average rates for the same types of loans. For example, fixed FHA with fixed FHA. The result is a good overview of the daily rates and their development over time.
The information contained on The Mortgage Reports website is provided for informational purposes only and does not constitute advertising for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent company or affiliates.