Friday, June 10 2022

Today’s Mortgage and Refinance Rates

Average mortgage rates rose slightly yesterday. But they increased significantly over the week as a whole. And Freddie Mac reported on Thursday that those rates have now risen for seven straight weeks.

I suspect mortgage rates could rise next week, also. However, the markets still face a lot of turbulence and uncertainty. We must therefore be wary of any prediction.

Current mortgage and refinance rates

Program Mortgage rate APR* Switch
30-year fixed conventional 5.461% 5.487% -0.03%
15-year fixed conventional 4.709% 4.754% +0.09%
20-year fixed conventional 5.502% 5.541% +0.07%
10-year fixed conventional 4.552% 4.618% +0.11%
30-year fixed FHA 5.384% 6.176% +0.02%
15-year fixed FHA 5.062% 5.355% +0.35%
30-year fixed PV 4.912% 5.12% -0.01%
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.

By some metrics, mortgage rates are currently at their highest since 2009. They began to edge up slowly last August. Then we had a slightly bigger uptick from mid-December 2021. And they’ve been skyrocketing since early March.

You are right to say that this rate of change cannot last forever. And various things (see below) could slow the rise in mortgage rates or even reverse it. But I suspect we’ll see continued upsides for at least the next few months – possibly longer.

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

Mortgage rates have risen on market fears of two things:

  1. Inflation — Now at its highest level in 40 years
  2. The Federal Reserve’s plans to fight inflation — These could push mortgage rates even higher. And they can create a recession, if they’re misjudged and too aggressive

As of midnight tonight, we shouldn’t hear another peek from the Fed until a report and press conference on May 4. So markets won’t have much to do as they guess how aggressive the central bank’s plans will be.

Of course, that won’t stop them from speculating. And, if the markets’ feverish imaginations expect an even harsher response to inflation than they currently think, mortgage rates could rise rapidly by then. But if they think they’ve been too pessimistic and moderate their expectations, those rates could hold steady or fall.

Of course, there are only 11 days between today and May 4th. So we are talking about a relatively short period.

Goldilocks Day

Think of May 4 as Goldilocks Day. If the Fed’s anti-inflation plans are more aggressive than expected, then it would be “too hot” for the markets, and mortgage rates could rise. If these plans are less aggressive (too cold), mortgage rates could drop. But if the plans arrive as expected, that would be perfect. And those rates could barely budge.

I wish I could tell you how Goldilocks day is going to go. Judging by the rhetoric from Fed officials, we can expect some very aggressive actions. But the people who make up the markets have read the same reports I have. And hope they have accurately anticipated (and assessed) what is to come.

So we just have to wait until May 4 to find out what the Fed is actually saying.

We already know part of it. Fed officials largely followed a 0.5% hike in its federal funds rate. Everyone is waiting for it and has rated it. This should therefore change little in the markets.

What we still don’t know is how fast the Fed will cut its $2.73-trillion holdings of mortgage-backed securities (MBS). It is the type of bond that largely determines mortgage rates. And the speed with which the central bank reduces these holdings will be decisive for the next movement of these rates.

We have far less – and less certain – guidance on the Fed’s plans in this regard. Some figures have been circulated. But the main message was to wait until May 4.

Again, markets will have done their best to anticipate what the Fed might do about MBS. But the unveiling of the final plan could push mortgage rates in either direction as investors prepare to adjust their expectations to reality.

Economic reports next week

One thing that could sway the Fed heading into its next meeting is the official Personal Consumer Expenditure (PCE) price index, which is due out next Friday. It’s not only the central bank’s favorite inflation measure, but it’s also the closest to its May 4 meeting.

If inflation is higher than expected, the Fed could control inflation more aggressively than it currently expects. Thus, the markets will also be watching this figure closely.

Next week’s other big report is the first reading of Gross Domestic Product (GDP) for the first quarter of this year (Q1/22). No one expects growth to have been as strong as the previous quarter. But how much weaker will it be?

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.

  • Tuesday-March Durable goods orders. Plus February home price indexes from S&P Case-Shiller and the Federal Housing Finance Agency. Also the April Consumer Confidence Index
  • Wednesday — March pending home sales
  • Thursday — Q1/22 gross domestic product. Plus new weekly unemployment insurance claims through April 23
  • Friday — March Personal consumption expenditure (PCE) price index. Plus April Consumer Sentiment Index

Watch out Thursday and Friday.

Mortgage interest rate forecast for next week

Nothing has changed since last week. And I’ll keep predicting 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.

Your part

But you play an important role in determining your own mortgage rate in five ways. And you can affect it significantly by:

  1. Shop around for your best mortgage rate – They vary widely from lender to lender
  2. Boost your credit score – Even a small bump can make a big difference to your rate and payments
  3. Save the biggest down payment possible – Lenders like you to have real skin in this game
  4. Keep your other borrowings small — The lower your other monthly commitments, the higher the mortgage you can afford
  5. 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. Because we average 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.


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