Mortgage And Refinance Rates, Feb. 25

Today’s mortgage and refinance rates

Average mortgage rates fell yesterday. But the decrease was much smaller than many expected. And it may be that Russia’s invasion of Ukraine will have a lower immediate impact on those rates than many anticipated.

Indeed, markets this morning were signaling that mortgage rates today might rise. But we saw yesterday how much those markets can change during a single day.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Might Russia’s continuing invasion of Ukraine have a much smaller effect on mortgage rates than many of us assumed? It may well. Though it’s too soon to be certain.

This makes it even harder to decide whether to float or lock your mortgage rate. There may still be some war–related falls to come. But will they be big enough to justify the risk of their not materializing at all, and those rates resuming their upward path? Nobody knows.

I’m pretty cautious and would lock now. But you might legitimately take the opposite view and be willing to live with the risk of being wrong.

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

>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 climbed to 1.99% from 1.91%. (Very bad for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields
• Major stock indexes rose. (Bad 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 fell to $92.46 from $98.03 a barrel. (Good for mortgage rates*.) Energy prices play a large role in creating inflation and also point to future economic activity
• Gold prices tumbled to $1,895 from $1,937 an ounce. (Bad 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 – jumped to 28 from 13 out of 100. (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 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 rise. However, be aware that “intraday swings” (when rates change direction during the day) are a common feature right now.

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.

A lot is going on at the moment. 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?

Ukraine

The scenes on TV from Ukraine are horrifying. And, no doubt, investors are as moved by them as the rest of us are.

But, when at work, those investors are only interested in the economic consequences of the war. And they seem to be concluding those are going to be limited.

Not everyone agrees. And this morning’s Financial Times warns that “Soaring energy prices alone could tip the world into a second recession in three years.”

But markets aren’t yet taking that view. At about 9:50 a.m. (ET) yesterday, the Dow Jones Industrial Average had plunged by more than 800 points. But, by the end of the day, it had regained all that lost ground and closed up 92 points. That’s roughly a 900–point intraday swing, which is something you don’t see every day.

Don’t assume that markets know something you don’t. There may be reasons for that swing (perhaps amateur investors sold in a panic and professionals snapped up the bargains they created) but that doesn’t necessarily mean it was an accurate reflection of the risks the war poses.

Inflation

Meanwhile, The Financial Times might be right. Just because oil prices are lower this morning than they were at the same time yesterday that doesn’t have to mean they’ll stay that way.

Indeed, before yesterday’s invasion, some experts were forecasting prices of $110 or $120 a barrel or even higher. And nothing yet has proved them wrong.

What happens to those prices next will depend partly on whether Russia can find other customers (China?) for its oil and partly on how high Europe can afford to push up the price it pays to alternative suppliers amid shortages.

Of course, another recession would be bad for us all in most respects. But it would probably be good for mortgage rates.

However, we may have to wait months for one to come along – if it turns up at all. And those now deciding whether to float or lock their mortgage rate are unlikely to have the luxury of that sort of time.

For them, this is a period of great uncertainty. And their decision is more likely to be driven by their personal appetite for risk than anything markets signal or I say.

For a more detailed look at what’s happening to mortgage rates, read the latest weekend edition of this 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 that year, according to Freddie Mac.

The most recent weekly record low occurred on Jan. 7, 2021, 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 last September, the rises have grown more pronounced, though not consistently so. So far in 2022, rises have been appreciable and relatively consistent.

Freddie’s Feb. 24 report puts that weekly average for 30–year, fixed–rate mortgages at 3.89% (with 0.8 fees and points), down from the previous week’s 3.92%.

Note that Freddie expects you to buy discount points (“with 0.8 fees and points”) on closing that earn you a lower rate. If you don’t do that, your rate would have been well over 4% that week, which is closer to the rates we and others quote.

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 rate forecasts for the four quarters of 2022 (Q1/22, Q2/22, Q3/22, Q4/22).

The numbers in the table below are for 30–year, fixed–rate mortgages. Fannie’s were published on Feb. 18 and Freddie’s and the MBA’s on Jan. 21.

Forecaster	Q1/22	Q2/22	Q3/22	Q4/22
Fannie Mae	3.5%	3.6%	3.7%	3.7%
Freddie Mac	3.5%	3.6%	3.7%	3.7%
MBA	3.3%	3.5%	3.7%	4.0%

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

Find your lowest rate today

You should comparison shop 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.”

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.