Today’s mortgage and refinance rates
Average mortgage rates rose appreciably yesterday. We had warned that a rise might be on the cards. This morning, a fall looks more likely. And conventional loans today start at 2.75% (2.75% APR) for a 30-year, fixed-rate mortgage.
Yesterday’s rise wasn’t huge but it was enough to wipe out most of the gains made over the last week or so. But it doesn’t necessarily mean we’re in for many more rises. Indeed, we may see a fall today. Read on for more.
Current mortgage and refinance rates
|Conventional 30 year fixed||2.75%||2.75%||Unchanged|
|Conventional 15 year fixed||2.5%||2.5%||-0.13%|
|Conventional 5 year ARM||3%||2.743%||Unchanged|
|30 year fixed FHA||2.25%||3.226%||Unchanged|
|15 year fixed FHA||2.25%||3.191%||Unchanged|
|5 year ARM FHA||2.5%||3.239%||Unchanged|
|30 year fixed VA||2.25%||2.421%||Unchanged|
|15 year fixed VA||2.25%||2.571%||Unchanged|
|5 year ARM VA||2.5%||2.419%||Unchanged|
|Your rate might be different. Click here for a personalized rate quote. See our rate assumptions here.|
COVID-19 mortgage updates: Mortgage lenders are changing rates and rules due to COVID-19. To see the latest on how coronavirus could impact your home loan, click here.
Should you lock a mortgage rate today?
In normal times, yesterday’s rise wouldn’t be worthy of comment. But it feels bigger than it was, because we’ve recently grown used to small movements and those have skewed our sense of perspective.
But even if we see more rises in mortgage rates in coming days (unlikely today), that probably won’t disrupt the overall trend over recent months. And that’s one that’s been friendly to borrowers.
Of course, that doesn’t mean there aren’t dangers lurking that could cause sharper and more permanent rises — or other factors that might cause falls. But, right now, those feel relatively distant.
Meanwhile, the Federal Reserve continues to keep rates low — and may drive them lower — through its continuing purchases of mortgage-backed securities.
So, for now, my personal recommendations remain:
- LOCK if closing in 7 days
- LOCK if closing in 15 days
- FLOAT if closing in 30 days
- FLOAT if closing in 45 days
- FLOAT if closing in 60 days
With so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So be guided by your personal tolerance for risk.
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Market data affecting today’s mortgage rates
Here’s the state of play this morning at about 9:50 a.m. (ET). The data, compared with about the same time yesterday morning, were:
- The yield on 10-year Treasurys nudged down to 0.69% from 0.71%. (Good for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields, though less so recently
- Major stock indexes were appreciably lower on opening. (Good for mortgage rates.) When investors are buying shares they’re often selling bonds, which pushes prices of those down and increases yields and mortgage rates. The opposite happens when indexes are lower
- Oil prices fell to $37.37 from $39.07 a barrel. (Good for mortgage rates* because energy prices play a large role in creating inflation and also point to future economic activity.)
- Gold prices inched lower to $1,906 from $1,911 an ounce. (Neutral for mortgage rates*.) In general, it’s better for rates when gold rises, and worse when gold falls. Gold tends to rise when investors worry about the economy. And worried investors tend to push rates lower.
- CNN Business Fear & Greed index edged up to 43 from 41 out of a possible 100 points. (Bad for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are better than higher ones
*A change of less than $20 on gold prices or a matter of cents on oil ones is a fraction of 1%. So we only count meaningful differences as good or bad for mortgage rates.
Before the pandemic and the Fed’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. The Fed is now a huge player and some days can overwhelm investor sentiment.
So use markets only as a rough guide. They have to be exceptionally strong (rates are likely to rise) or weak (they could fall) to rely on them. Today they’re looking better for mortgage rates. Markets are responding to news of President Donald Trump’s positive COVID-19 test as well as a disappointing monthly jobs report and fading hope for a federal stimulus.
Important notes on today’s mortgage rates
Here are some things you need to know:
- The Fed’s ongoing interventions in the mortgage market (at least $1 trillion; some say nearly $2 trillion) should put continuing downward pressure on these rates. But it can’t work miracles all the time. So expect short-term rises as well as falls. And read “For once, the Fed DOES affect mortgage rates. Here’s why” if you want to understand this aspect of what’s happening
- Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read How mortgage rates are determined and why you should care
- Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
- Lenders vary. Yours may or may not follow the crowd when it comes to rate movements — though they all usually follow the wider trend over time
- When rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
- At times of high demand, lenders can push up rates as a way of managing their workflow. Neither markets nor the Fed can help when that happens
So there’s a lot going on here. And nobody can claim to know with certainty what’s going to happen to mortgage rates in coming hours, days, weeks or months.
Are mortgage and refinance rates rising or falling?
Over the last few months, the overall trend for mortgage rates has clearly been downward. A new all-time low was set early in August and we’ve gotten close to others since. Still, a new one remains a real possibility.
Two pieces of news emerged earlier today that look to be putting downward pressure on mortgage rates. The first was the announcement that President Trump has tested positive for COVID-19. Soon after his tweet in the small hours, Treasury yields dipped, which is good for mortgage rates.
The other big news was this morning’s official employment situation report for September. That showed fewer new jobs (661,000) than analysts had forecast (800,000). Again, that’s likely to depress mortgage rates today.
Meanwhile, hopes for a new round of federal stimulus measures are fading fast. The House passed a bill yesterday but there’s little sign the Senate or White House will take it further. And the House is due to go into recess today until the new year.
Expert mortgage rate forecasts
Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.
And here are their current rates forecasts for the last quarter of 2020 (Q4/20) and the first three of 2021 (Q1/21, Q2/21 and Q3/21).
Note that Fannie’s (published Sept. 15) and the MBA’s (Sept. 21) are updated monthly. However, Freddie’s are now published quarterly. The last was released on June 8 and the next was, presumably, due in September. But, as of the morning of Oct. 2, there’s no sign of it yet. So Freddie’s feel stale.
The numbers in the table below are for 30-year, fixed-rate mortgages:
So expectations vary considerably. You pays yer money …
Find your lowest rate today
Everyone — from federal regulators to personal finance gurus — agrees that shopping around for your new mortgage or refinance is important. You could save thousands over just a few years by getting quotes from multiple lenders. And more, if you keep your mortgage for a long time or have a large loan.
But you’ve rarely had more to gain by shopping around than you do now. The mortgage market is currently very messy. And some lenders are offering appreciably lower rates than others. Worse, some are making it harder to get any mortgage at all if you want a cash-out refinance, a loan for an investment property, a jumbo loan or if your credit score is damaged.
So start shopping around soon for your new mortgage or refinance. You’re most likely to find a great deal on the type of loan you want if you spread your net widely.
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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 end result is a good snapshot of daily rates and how they change over time.
Published at Fri, 02 Oct 2020 11:30:13 +0000