Today’s mortgage and refinance rates
Average mortgage rates rose appreciably on Thursday (markets were closed for Good Friday yesterday). Overall, those rates moved higher last week, thanks to sharp rises on Monday and Thursday. But worthwhile falls on Tuesday and Wednesday blunted those increases.
Just as last week, I’m going to predict that mortgage rates might rise next week. But, also like last week, there’s too much uncertainty and volatility in markets for that to be much more than a guess.
Current mortgage and refinance rates
|Conventional 30 year fixed||5.348%||5.374%||+0.02%|
|Conventional 15 year fixed||4.516%||4.546%||+0.03%|
|Conventional 20 year fixed||5.279%||5.318%||Unchanged|
|Conventional 10 year fixed||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 VA||4.891%||5.105%||Unchanged|
|15 year fixed VA||4.505%||4.847%||Unchanged|
|Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions here.|
Should you lock a mortgage rate today?
I’d lock my rate on the first morning when mortgage rates look likely to rise. Recently, that’s been most mornings.
Unfortunately, I remain a pessimist about mortgage rates. And I reckon they’ll probably continue to go up for some time to come. With luck, the pace at which they rise might begin to slow sometime soon. But I see few signs of sustained falls in the coming months.
Of course, I might be wrong. But I think it considerably more likely they’ll continue higher than that they’ll drop for more than a few days at a time.
So, my personal rate lock 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 let your gut and your personal tolerance for risk help guide you.
What’s moving current mortgage rates
So far in 2022, key markets have been scrambling to keep ahead of the Federal Reserve’s plans to rein in inflation. Those markets always try to anticipate events rather than wait for them to happen.
And both the main tools at the Fed’s disposal will almost inevitably push mortgage rates higher.
Of course, the Fed has hardly started to implement those plans. Its only move so far has been a minor hike in the federal funds rate, which affects variable-rate borrowing but has only an indirect impact on new mortgage rates.
But the Fed’s been ramping up its rhetoric, signaling its willingness to carry out more and bigger hikes to that rate. And it’s also pre-announced plans, set to be unveiled on May 4, to reduce its bond holdings.
Those holdings include $2.74 trillion in mortgage-backed securities (MBSs), the type of bond that largely determines mortgage rates. And it’s how aggressively the Fed will scale back its MBS holdings that markets are now trying to anticipate.
Of course, there’s a possibility that May 4 will bring a pleasant surprise and that the Fed will reveal only modest plans. That could see mortgage rates fall.
But I’m afraid it’s much more likely that the plans will be as bad or worse for mortgage rates as markets fear. And that could push those rates yet higher. Certainly, highly 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) revealed its latest forecast for mortgage rates. And it expects ones for 30-year, fixed-rate mortgages to average 4.7% in the current (April-June) quarter. That would mean those rates falling from their current levels.
But I suspect even the MBA would concede that it’s been overly optimistic in its recent forecasts. In January, it predicted that those mortgage rates would average 3.5% in the current quarter.
That’s not to embarrass the MBA. That same month, Fannie Mae was forecasting that rate would be 3.3% this quarter. And, at the same time, Freddie Mac thought 3.6%. All those figures show how impossibly difficult it is to make accurate predictions in the current environment.
Economic reports next week
Unless you work in construction or real estate, next week’s economic reports might be quite boring.
The potentially most important reports, below, are set in bold. The others are unlikely to move markets much unless they contain shockingly good or bad data.
- Monday — April National Association of Home Builders’ home builders’ index
- Tuesday — March building permits and housing starts
- Wednesday — March existing home sales
- Thursday — March leading economic indicators. Plus weekly new claims for unemployment insurance to April 16
- Friday — April purchasing manager indexes (PMIs) from S&P (Markit) for the manufacturing and services sectors
It’s unlikely any economic reports next week will affect mortgage rates much.
Mortgage interest rates forecast for next week
I will continue to predict that mortgage rates might 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 usually move in tandem. And the scrapping of the adverse market refinance fee last year has largely eliminated a 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 costly.
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.
But you play a big part in determining your own mortgage rate in five ways. And you can affect it significantly by:
- Shopping around for your best mortgage rate — They vary widely from lender to lender
- Boosting your credit score — Even a small bump can make a big difference to your rate and payments
- Saving the biggest down payment you can — Lenders like you to have real skin in this game
- Keeping your other borrowing modest — The lower your other monthly commitments, the bigger the mortgage you can afford
- Choosing your mortgage carefully — Are you better off with a conventional, conforming, FHA, VA, USDA, jumbo or another loan?
Time spent getting these ducks in a row can see you winning lower rates.
Remember, they’re 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) that lenders will quote you. 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 and your down payment, especially if you’re a first-time buyer. Read:
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The result is a good snapshot of daily rates and how they change over time.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement 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, or affiliates.