Today’s Mortgage and Refinance Rates
Average mortgage rates fell yesterday, a possibility we had anticipated. But the drop was larger than expected. And they are now at their lowest level in over a month.
My best guess is that mortgage rates could rise slightly next week. But they are currently inherently unpredictable. So it’s really a guess, based on nothing more that rebounds are common after the kind of crashes we’ve seen this week.
Find and Lock a Low Rate (Jun 12, 2021)
Current mortgage and refinancing rates
|Conventional 30 years fixed||2.811%||2.811%||Unchanged|
|Conventional 15 years fixed||2,125%||2,125%||Unchanged|
|Conventional 20 years fixed||2.625%||2.625%||Unchanged|
|Conventional 10 years fixed||1,945%||1,978%||Unchanged|
|5-year conventional MRA||3,532%||3,191%||-0.03%|
|30-year fixed FHA||2.688%||3.343%||Unchanged|
|15 years fixed FHA||2.404%||3.003%||Unchanged|
|5 years ARM FHA||2.5%||3,194%||Unchanged|
|Fixed VA over 30 years||2,255%||2,426%||+ 0.01%|
|VA fixed 15 years||2.25%||2,571%||Unchanged|
|ARM VA 5 years||2.5%||2,372%||Unchanged|
|Prices are provided by our network of partners and may not reflect the market. Your rate may be different. Click here for a personalized quote. See our pricing assumptions here.|
Find and Lock a Low Rate (Jun 12, 2021)
COVID-19 Mortgage Updates: Mortgage lenders change rates and rules due to COVID-19. To see the latest information on the impact of the coronavirus on your home loan, click here.
Should you lock in a mortgage rate today?
While this week is relatively good for mortgage rates, I will lock in again soon. But not a day when these rates are likely to fall.
Yes, this week’s moves have widened the narrow range in which rates have moved recently. But the benefits of floating are, in my opinion, still slim compared to the risks.
And that’s why my personal 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, if not better. So let your instincts and your personal risk tolerance guide you.
What changes current mortgage rates
Last week, I noticed that the markets had not reacted as usual to the report on the employment situation. And, this week, I should report that the anomaly continued in their response to the Consumer Price Index.
It seems that investors are still ready to accept the Federal Reserve’s analysis of the price increase. The Fed believes the hikes are transient and won’t force it to raise interest rates or cut asset purchases sooner than expected.
If the Fed is right, it will be good news for mortgage borrowers. Because those asset purchases currently include $ 40 billion per month in mortgage-backed securities. And they keep mortgage rates artificially low.
However, if the Fed gets it wrong and has to cut back on its asset purchases early on, it risks spiking mortgage rates.
It is therefore good that the Fed remains credible with investors. But voices contesting his analyzes are increasing. Yesterday, the Washington Post explained:
Despite the highest inflation Since the 2008 financial crisis, the Federal Reserve has continued the easy money approach it took last year to avert a depression pandemic. â¦ But some notable critics warn that scorching inflation could instead feed on itself, ultimately forcing the Fed to put the brakes on by raising interest rates. This could curb the rise in prices, but only at the cost of plunging the United States into another recession and destabilizing the global economy by forcing many foreign investors and borrowers to absorb punitive losses.
– WaPo, “Rising US prices could shake other countries amid patchy global recovery, â(Paywall) June 11, 2021
The last time the Fed tried to âput the brakesâ in 2013, mortgage rates skyrocketed.
A little good news
But, in recent days, the financial media have started to report a new phenomenon. And that could help moderate any future mortgage rate hikes.
It seems that the weak dollar is attracting more foreign investors. Let’s see why.
Suppose you are a UK investor based in the City of London. Over the past two years, Â£ 1million (GB pounds) would have bought you on average about $ 1,280,000. But on average so far in 2021, that would buy you $ 1,390,000. So the weaker dollar has made investing in America more attractive: because you have more for yourâ¦ uh, pound.
Meanwhile, a 10-year ‘gilt’ (the UK name for what we call a Treasury bill or note) returned 0.711% yesterday. And, on the same day, a 10-year US Treasury bill was earning 1.453%. You don’t need a Nobel Prize in Economics to understand why UK and foreign investors turn to US Treasuries.
How this could affect mortgage rates
Mortgage Backed Securities (MBS) are also bonds. And they generally mirror 10-year US Treasuries. So if enough foreign investors accumulate in these notes and MBS, it could dampen the rise in mortgage rates.
Today, it is not yet clear to what extent foreign investors are already keeping mortgage rates low. Nor how much their influence could grow. But, since most experts predict higher mortgage rates, it’s good to have a straw to hang on to.
Economic reports next week
If the markets ignored the economic reports for the past two weeks – which included those on jobs and inflation, two topics that obsess over investors – will they care much about next week’s reports?
Who knows? But the major reports are all due out on Tuesday. This sees May data for retail sales, the producer price index and industrial production.
But the others listed below are unlikely to cause much movement in the markets unless they include some incredibly good or bad data. Plus, regular readers will know that the markets have ignored most of the economic reports in recent weeks. Thus, the effects of the following may be different from normal:
- Tuesday – May Retail sales, producer price index and industrial production
- Wednesday – May Building permits and starts
- Thursday – May index of leading economic indicators. No more new weekly unemployment insurance claims until June 12
So Tuesday is the big day.
Find and Lock a Low Rate (Jun 12, 2021)
Mortgage interest rate forecasts for next week
There is often a modest rebound in mortgage rates after the declines we’ve seen this week. But the markets are so bizarre right now that any forecasting is necessarily speculative. Yet my best guess has to be that mortgage rates could go up a bit next week.
Mortgage and refinancing rates generally move in tandem. But be aware that refinancing rates are currently a little higher than those for purchase mortgage loans. This spread is likely to remain fairly constant as they change.
Meanwhile, a recent regulatory change has made most mortgages for investment property and vacation homes more expensive.
How your mortgage interest rate is determined
Mortgage and refinancing rates are generally 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. Mortgage rates therefore 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. You can significantly affect it by:
- Find Your Best Mortgage Rate – They Vary Dramatically From Lender to Lender
- Increase Your Credit Score – Even a Small Bump Can Make a Big Difference in Your Rate and Payments
- Save the Biggest Down Payment Possible – Lenders love you to have real skin in this game
- Keep your other loans small – The lower your other monthly commitments, the larger the mortgage you can afford
- Choosing Your Mortgage Carefully – Are you better off with a conventional, FHA, VA, USDA, jumbo or whatever loan?
The time spent getting those ducks in a row can earn you lower rates.
Remember, it’s not just a mortgage rate
Be sure to count all of your upcoming homeownership costs when determining how much mortgage you can afford. So focus on your “PITI” This is your Pmain (reimburses the amount you borrowed), Iinterest (the loan price), (property) Taxes, and (owners) Iinsurance. Our mortgage calculator can help.
Depending on the type of mortgage you have and the amount of your down payment, you may also need to pay for mortgage default insurance. And that can easily reach three digits each month.
But there are other potential costs. You will therefore 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 in case of a problem!
Finally, you will have a hard time forgetting the closing costs. You can see which are reflected in the Annual Percentage Rate (APR) that will be shown to you. Because it effectively spreads them out over the life 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 each 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 an APR for each type of loan to display in our graph. Because we average a range of rates, it gives you a better idea of ââwhat you might find in the market. In addition, we average the rates for the same types of loans. For example, fixed FHA with fixed FHA. The end result is a good overview of the daily rates and how they have changed over time.