The current mortgage and refinancing rates
Average mortgage rates fell just a hint lower yesterday. And conventional loans today start at 3,063% (3,063% APR) for a 30-year fixed-rate mortgage.
Last week started badly for these rates with a small increase. But they recovered quickly and are slightly lower than a week ago.
My best guess is that the next seven days will be just as good, with mortgage rates will fall again next weekBut no one can be sure of this.
|Program||Mortgage interest||APR *||Change|
|Conventional fixed for 30 years||3.063||3.063||Unchanged|
|Conventional fixed for 15 years||3||3||Unchanged|
|Conventional ARM for 5 years||3||2,743||Unchanged|
|30 years of fixed FHA||2,938||3,919||Unchanged|
|Fixed FHA for 15 years||2,125||3.065||Unchanged|
|5 years ARM FHA||2.5||3,226||Unchanged|
|30 years permanent VA||2,813||2.99||-0.06%|
|15 years permanent VA||2||2,319||Unchanged|
|5 years ARM VA||2.5||2,406||Unchanged|
|The rates are provided by our partner network and may not reflect the market. Your rate may differ. Click here for a personalized price offerSee our rate assumptions here|
COVID-19 Mortgage Updates: Mortgage lenders change rates and rules because of COVID-19. To see the latest news on how the coronavirus can affect your home loan, click here
Should You Lock Out Mortgage Interest Today?
Depending on the type of mortgage you have, you may be staring at rock bottom. So no one could blame you for grabbing the moment and locking in today.
But I probably wouldn’t unless I was a few weeks or less before closing. That’s because I think there are more small declines ahead. However, they will be almost interrupted by periods of gains that I hope will prove to be short and short.
But the rewards of waiting may be modest. And the risk of great news reversing the trend never goes away.
So the decision may have more to do with your personal risk appetite than any rational analysis.
But for now my personal recommendations are:
- KEY LOCK when you get closer 7 days
- KEY LOCK when you get closer 15 days
- FLOAT when you get closer 30 days
- FLOAT when you get closer 45 days
- FLOAT when you get closer 60 days
However, with so much uncertainty right now, your instincts can easily turn out to be as good as mine – or better. So let yourself be guided by your feelings and your personal risk tolerance.
What moves the current mortgage interest
I still think the most likely scenario for mortgage rates is that they move slowly and gently lower – with an occasional short riseThat applies next week and beyond.
But you shouldn’t rely on my opinion for two reasons. First, unexpected news can appear at any time. For example, we just received encouraging vaccine announcements on three consecutive Mondays. And secondly, investors often see reality differently from us ordinary people.
It’s hard to overstate how badly the US has been affected by COVID-19. It killed more than 270,000 Americans and infected 13.4 million. NBC News reported, “More than 1.2 million people in the US contracted Covid-19 in the week leading up to Thanksgiving, nearly double the more than 635,000 new cases three weeks earlier.”
And those transfer rates (and later hospitalizations and death rates) are likely to pick up again after Thanksgiving. More than a million Americans flew for the holidays and many more drove to family gatherings where there may be no social detachment.
Some are optimistic that vaccines will soon reduce the effects of the coronavirus. But during the week, I quoted management consulting firm McKinsey & Co’s prediction of how quickly they could have a meaningful impact:
The positive results of the vaccine studies mean that the United States will most likely reach an epidemiological end to the pandemic (herd immunity) in Q3 or Q4 2021.
– McKinsey & Company, When Does the COVID-19 Pandemic End? Nov 23, 2020
And that’s if these vaccines jump through all the regulatory hoops and remove all the logistical hurdles in their path. Equally important, it relies on enough Americans to consent to vaccination. So we are not only facing a hard winter, but also an equally difficult spring and summer – and maybe even autumn.
Pandemic and the economy
Investors are people too. But when it comes to their professional lives, it is the economic consequences of the pandemic rather than the personal ones that bother them the most.
And weekly unemployment insurance claims have started to rise again in the last two reports. Meanwhile, it is hard to see how the inescapable anti-coronavirus restrictions imposed by governors and mayors will not soon feed through to other aspects of the economy.
Mortgage rates are almost always low in times of economic stress and rise as the country thrives. Therefore, I expect further interest rate falls in the near future.
Economic reports next week
Friday is the big day on the calendar of next week’s economic reports. That’s when the monthly employment report is published. Investors often see this as the most important publication of all. And they will look at the number of jobs created or lost in November, as well as the unemployment rate.
Other important reports are:
- Tuesday – Institute of Supply Management (ISM) purchasing managers index (PMI) for the manufacturing sector
- Wednesday – ADP Employment Report – Sometimes seen as a bell to Friday’s official employment report
- Thursday – New applications for unemployment insurance every week. Plus the ISM’s PMI for the services sector
Some of these are already out of date when published. The current wave of COVID-19 infections soared in the second half of November, making measurements for the first half outdated.
Mortgage interest rates for next week
I expect the next seven days to be another quiet good week for mortgage interest rates. Sharp dips or rises seem unlikely And a continuation of the soft downtrend seems the most likely scenario, apart from some exceptionally good news.
But as it is becoming increasingly clear, major and highly unpredictable events are going on right now. So there are no guarantees.
Mortgage and refinancing rates usually go together. But keep in mind that the refinancing rates are currently slightly higher than those for purchase mortgages. That gap will likely remain constant as they change.
How your mortgage interest is determined
Mortgage and refinancing 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 is highly dependent on the economy. Mortgage rates are therefore usually high when things are going well and low when the economy is in trouble.
But you play a big part in determining your own mortgage rate in five ways. You can influence it significantly by:
- Shop around for your best mortgage rates – They vary widely by lender
- Increase Your Credit Score – Even a small bump can make a big difference to your rate and payments
- Save the biggest down payment you can – lenders like you have real skin in this game
- Keeping Your Other Loans Modest – The lower your other monthly obligations, the greater the mortgage you can afford
- Choose Your Mortgage Carefully – Are you better off with a conventional, FHA, VA, USDA, jumbo, or other loan?
The time you spend getting these ducks in a row can lead to you winning lower prizes.
Remember, it’s not just a mortgage interest
Make sure to include all of your upcoming home ownership costs when calculating how much of a mortgage you can afford. So focus on your “PITI” That’s your P.principal (pays off the loan amount), Interest (the price of the loan), (property) T.axes, and (homeowners) Iinsurance. Our mortgage calculation can help with this.
Depending on your type of mortgage and the amount of your down payment, you may also have to pay for mortgage insurance. And that can easily run up to three digits every month.
But there are other possible costs. So you have to pay association contribution from homeowners if you choose to live somewhere with a HOA. And wherever you live, you can expect repairs and maintenance costs. There is no landlord to call if something goes wrong!
Finally, it’s hard to forget about closing costs. These will be reflected in the annual percentage (APR) you will receive. Because that effectively spreads it over the term of your loan, making it higher than your fixed mortgage rate.
But you may be able to get help with those closing costs and your deposit, especially if you are buying for the first time. Read:
Mortgage interest methodology
The Mortgage Reports receives rates based on selected criteria from multiple loan partners per day. We arrive at an average rate and APR for each type of loan to display in our chart. Since we have an average number of rates, it gives you a better idea of what you can find in the market. In addition, we calculate average rates for the same types of loans. For example: FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.
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