Mortgage And Refinance Rates Today, Dec. 20| Rates falling

Today’s mortgage and refinance rates

Average mortgage rates moved moderately lower last Friday – and last week. And that was probably down to fears over the new Omicron variant of COVID–19.

Those fears are continuing this morning. And it’s looking as if mortgage rates today might move lower again. But, as always, that could change as the hours pass.

Find your lowest rate. Start here (Dec 21st, 2021)

Current mortgage and refinance rates

Should you lock a mortgage rate today?

I’m guessing that mortgage rates might continue to fall until we get a better understanding of the economic threats of the Omicron variant. And we’re probably a week or two off scientists being able to provide that clearer picture.

Of course, rates may rise on some days during that period. But, overall, I’m expecting them to move lower for now.

So I changed my personal rate lock recommendations over the weekend. And they’re now:

• FLOAT if closing in 7 days
• FLOAT if closing in 15 days
• FLOAT if closing in 30 days
• FLOAT if closing in 45 days
• FLOAT if closing in 60 days

>Related: 7 Tips to get the best refinance rate

Market data affecting today’s mortgage rates

Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:

• The yield on 10-year Treasury notes held steady at 1.38%. (Neutral for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields
• Major stock indexes were lower soon after 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 may happen when indexes are lower. But this is an imperfect relationship
• Oil prices dropped to $67.28 from $71.18 a barrel. (Good for mortgage rates*.) Energy prices play a large role in creating inflation and also point to future economic activity
• Gold prices edged down to $1,796 from $1,808 an ounce. (Neutral for mortgage rates*.) In general, it is 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 – decreased to 25 from 26 (Friday’s closing number) out of 100. (Good 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 40 cents on oil ones is a fraction of 1%. So we only count meaningful differences as good or bad for mortgage rates.

Caveats about markets and rates

Before the pandemic and the Federal Reserve’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. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.

So use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today might fall modestly. However, be aware that “intraday swings” (when rates change direction during the day) are a common feature right now.

Find your lowest rate. Start here (Dec 21st, 2021)

Important notes on today’s mortgage rates

Here are some things you need to know:

1. 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
2. Only “top–tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
3. Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements – though they all usually follow the wider trend over time
4. When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
5. Refinance rates are typically close to those for purchases. And a recent regulatory change has narrowed a gap that previously existed

So a lot is 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?

I suspect that markets will be dominated by Omicron fears for the next week or two. And that’s likely to bring falling mortgage rates.

How long those falls last will depend on how long it takes scientists to collect and process enough data to tell everyone just how big a threat Omicron poses.

If those data suggest that current worst–case scenarios are likely to come about, mortgage rates may tumble and remain uberlow for months. But, if those data show that best–case scenarios are probable, those rates will probably begin to rise again in a week or two.

So far, all we really know is that Omicron is much more transmissible than earlier variants of COVID–19. True, there are signs it may often lead to less severe medical consequences. But nothing is definite yet.

Many of the early data are coming from South Africa, which has a very different demographic profile from most advanced nations, including the US and Europe. In particular, South Africa’s population is much younger. And you’d expect fewer severe cases among younger patients.

So we just have to wait for the scientists to crunch their numbers.

For more background, read Saturday’s weekend edition of this daily report.

Recently

Over much of 2020, the overall trend for mortgage rates was clearly downward. And a new, weekly all–time low was set on 16 occasions last year, according to Freddie Mac.

The most recent weekly record low occurred on Jan. 7, when it stood at 2.65% for 30–year fixed–rate mortgages.

Since then, the picture has been mixed with extended periods of rises and falls. Unfortunately, since September, the rises have grown more pronounced, though not consistently so.

Freddie’s Dec. 16 report puts that weekly average for 30–year, fixed–rate mortgages at 3.12% (with 0.6 fees and points), slightly up from the previous week’s 3.10%.

Expert mortgage rate forecasts – updated today

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 rate forecasts for the remaining, current quarter of 2021 (Q4/21) and the first three quarters of 2022 (Q1/22, Q2/22 and Q3/22).

The numbers in the table below are for 30–year, fixed–rate mortgages. Fannie’s were published on Dec. 20 and the MBA’s on Nov. 22.

Freddie’s were released on Oct. 15. It now updates its forecasts only quarterly. So we may not get another from it until January. And it’s already looking stale.

Forecaster	Q4/21	Q1/22	Q2/22	Q3/22
Fannie Mae	3.1%	3.1%	3.2%	3.3%
Freddie Mac	3.2%	3.4%	3.5%	3.6%
MBA	3.1%	3.3%	3.5%	3.7%

However, given so many unknowables, the whole current crop of forecasts may be even more speculative than usual.

And none of these forecasters had any idea that Omicron might entirely change the models on which they’re based.

Find your lowest rate today

Some lenders have been spooked by the pandemic. And they’re restricting their offerings to just the most vanilla–flavored mortgages and refinances.

But others remain brave. And you can still probably find the cash–out refinance, investment mortgage or jumbo loan you want. You just have to shop around more widely.

But, of course, you should be comparison shopping widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:

Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan.

Show me today’s rates (Dec 21st, 2021)

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.