Mortgage And Refinance Rates, Feb. 28

Today’s mortgage and refinance rates

Average mortgage rates inched higher last Friday. And February has been an outstandingly terrible month for them.

But they may catch a break on the last day of the month. Because mortgage rates today look likely to fall.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

It’s been a terrible weekend for Russia. Its forces are encountering stiff resistance in Ukraine and it’s highly likely that its invasion plans are well behind schedule. On Sunday, President Vladimir Putin ordered a “special mode of combat duty of the [nuclear] deterrence forces,” which is the equivalent of our president raising the DEFCON level.

And, according to this morning’s Guardian, “The Russian central bank has increased interest rates to 20% from 9.5% after the rouble [British spelling of ruble] plunged up to 40% on Monday in the wake of western sanctions.” The ruble’s recovered a bit since then but it’s still way down.

All this is making markets here very nervous. And, so far this morning, it’s looking as if mortgage rates today might fall, perhaps appreciably. But we’ve recently been in similar situations only for things to change significantly during the working day.

I wouldn’t lock a mortgage rate today. But I almost certainly would soon. 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 last Friday, were:

• The yield on 10-year Treasury notes tumbled to 1.87% from 1.99%. (Very good for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields
• Major stock indexes plunged. (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 rose to $94.96 from $92.46 a barrel. (Bad for mortgage rates*.) Energy prices play a large role in creating inflation and also point to future economic activity
• Gold prices jumped to $1,917 from $1,895 an ounce. (Good 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 – fell to 23 from 28 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. 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?

Mortgage rates have risen sharply so far in February. True, they might fall today. But I’d be surprised if this were the start of a long–term downward trend.

“It’s the Fed, stupid!”

While Russia’s invasion of Ukraine has captured headlines, many investors remain focused on the Federal Reserve’s countermeasures against inflation. Two headlines in this morning’s Financial Times illustrate why I doubt mortgage rates are likely to fall far for long:

1. Ukraine war unlikely to deflect Fed from path of interest rate rises – Officials are convinced of the need to tighten policy even as Russia’s invasion clouds the economic outlook
2. Investors brace for flood of mortgage bonds when Fed trims balance sheet – US central bank is set to unwind massive pandemic–era stimulus measures

Now, that second one may be a bit alarmist. True, as of last Wednesday, the Fed owned mortgage bonds (“mortgage–backed securities,” known as MBSs) worth $2.72 trillion. And it is yields on those MBSs that largely determine mortgage rates. So, mortgage rates would shoot up if it suddenly sold even a small fraction of those.

But the Fed’s not dumb. And it’s almost certainly not going to do that. It’s going to start selling its MBSs this year, perhaps starting in June. But it’s going to do so in bite–sized chunks that markets will find digestible. Still, even that strategy will almost certainly push mortgage rates higher, just over a long period.

Uncertainty

Of course, The Financial Times’s view is just one opinion, though it’s widely shared. And, were Russia’s actions and the international community’s sanctions to harm the global economy enough, the Fed might be forced to revisit its current plans both for interest rate hikes and its sales of MBSs.

We’ll get more insights into the Fed’s thinking this week. Senior officials of the central bank have public speaking engagements scheduled for every day this week. And Fed Chair Jerome Powell is due to give testimony to a House committee on Wednesday.

Meanwhile, in spite of the Federal Reserve’s immense power, it remains at the mercy of global forces that it can’t control. So nothing’s set in stone.

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 – 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 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 the MBA’s on Feb. 25. Freddie now publishes these forecasts every quarter, most recently 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	3.8%	4.0%	4.1%	4.3%

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.