Today’s mortgage and refinance rates
Average mortgage rates fell sharply yesterday. And this week has been a good one for those rates.
I suspect the next seven days will be less good and that mortgage rates might rise next week. But so much depends on unpredictable events in Ukraine that I’m already half expecting to be proved wrong.
Current mortgage and refinance rates
|Conventional 30 year fixed||3.95%||3.974%||-0.11%|
|Conventional 15 year fixed||3.321%||3.355%||-0.07%|
|Conventional 20 year fixed||3.805%||3.839%||-0.13%|
|Conventional 10 year fixed||3.21%||3.278%||-0.11%|
|30 year fixed FHA||4.167%||4.93%||-0.07%|
|15 year fixed FHA||3.591%||4.213%||-0.1%|
|5/1 ARM FHA||4.75%||4.621%||Unchanged|
|30 year fixed VA||4.136%||4.344%||-0.08%|
|15 year fixed VA||3.213%||3.542%||Unchanged|
|5/1 ARM VA||4.75%||3.754%||Unchanged|
|Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions here.|
Should you lock a mortgage rate today?
I wouldn’t lock my mortgage rate today if I were you. Those rates are significantly better than they were this time last week.
But I’d be ready to push the button on Monday morning – or, rather, on the first morning when rates look likely to rise appreciably.
That’s because I have a feeling (no more than that) that markets have already taken into account the economic impact of Russia’s invasion of Ukraine. The final outcome, a Russian victory, appears a foregone conclusion to most military experts, simply because the invader has overwhelmingly superior firepower. Read on for more discussion.
Still, for the longer term, 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
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine – or better. So let your gut and your personal tolerance for risk help guide you.
What’s moving current mortgage rates
You can see how strangely markets have responded to Russia’s invasion of Ukraine and the international community’s consequent sanctions.
Looking back through Mortgage News Daily’s archive of rates, there was little reaction to the invasion itself. But Monday and Tuesday saw sharp falls, apparently in response to the unexpected ferocity of sanctions and spiking oil prices. Then there was an even sharper rise on Wednesday, followed by a tiny one the day after. The surprise came yesterday when they plunged again.
Of course, yesterday’s fall wasn’t a surprise in some respects. It was triggered by the Russian forces’ shelling of Zaporizhzhia, Ukraine’s (and Europe’s) largest nuclear power plant. Markets were prepared for brutality on the part of the invading army but not for such towering dumbness. And that shook investors as they wondered what this level of stupidity might bring in the future.
MND reckons average rates for a 30–year fixed–rate mortgage stood at 4.18% last Friday evening and 3.96% at the same time yesterday.
But my guess is that yesterday saw the last of the sharp falls in mortgage rates that the war in Ukraine will bring. Surely, markets have already priced in an ultimate Russian victory.
However, I would have said on Thursday that those falls had ended. And Friday proved me wrong. So recognize that nothing’s certain, least of all my predictions.
Unfortunately, oil prices feed especially quickly into inflation because its use is so ubiquitous across virtually every sector. And inflation was already running at its highest level since 1983 before the invasion.
After months of saying the current bout of inflation is transient (it might still be), the Federal Reserve has been signaling for some time that it plans to tackle it aggressively.
And, this week, Fed Chair Jerome Powell made clear that the war in Ukraine would make no difference to those plans. He told House and Senate committees to expect a 0.25% hike in most interest rates on March 16. And that the Fed was working on plans to sell its stockpile of bonds, though those plans wouldn’t be ready for release on that date.
Those bond holdings include $2.69 trillion in mortgage–backed securities, the type of bond that largely determines mortgage rates. And selling those, even at a modest pace, is highly likely to push mortgage rates higher. Meanwhile, Fed rate hikes don’t directly affect mortgage rates, but there’s likely to be a knock–on effect that will also push them higher.
Indeed, during his testimony, Mr. Powell explicitly warned that “Mortgage rates will go up,” according to The New York Times (paywall).
So, without the war in Ukraine, we’d likely have seen mortgage rates continue their recent trend of gently climbing. And, once the war’s influence on markets wanes, I reckon that’s what we have to look forward to.
Economic reports next week
There are relatively few economic reports scheduled for next week. But a couple of them are big ones. Watch out for Wednesday’s job openings and labor turnover survey (JOLTS). And the consumer price index on Thursday.
The potentially most important reports, below, are set in bold. The others are unlikely to move markets much unless they contain shockingly good or bad data.
- Tuesday – National Federation of Independent Business small–business index for February
- Wednesday – January JOLTS report (see above)
- Thursday – February consumer price index. Plus weekly new claims for unemployment insurance to March 5
- Friday – March consumer sentiment index
This week, markets shrugged off important domestic economic news as they focused on Ukraine. We’ll see whether they continue to do so next week.
Mortgage interest rates forecast for next week
If I’m right in my guess that markets are largely done with the war in Ukraine, I’d expect mortgage rates to move higher next week. But, if my guess is wrong, we could still see more falls, possibly sharp ones.
Mortgage and refinance rates usually move in tandem. And the scrapping of the adverse market refinance fee last year has largely eliminated a gap that had grown between the two.
Meanwhile, another recent regulatory change has likely made mortgages for investment properties and vacation homes more accessible and less costly.
How your mortgage interest rate is determined
Mortgage and refinance 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’s highly dependent on the economy. So mortgage rates tend to be high when things are going well and low when the economy’s in trouble.
But you play a big part in determining your own mortgage rate in five ways. And you can affect it significantly by:
- Shopping around for your best mortgage rate – They vary widely from lender to lender
- Boosting your credit score – Even a small bump can make a big difference to your rate and payments
- Saving the biggest down payment you can – Lenders like you to have real skin in this game
- Keeping your other borrowing modest – The lower your other monthly commitments, the bigger the mortgage you can afford
- Choosing your mortgage carefully – Are you better off with a conventional, conforming, FHA, VA, USDA, jumbo or another loan?
Time spent getting these ducks in a row can see you winning lower rates.
Remember, they’re not just a mortgage rate
Be sure to count all your forthcoming homeownership costs when you’re working out how big a mortgage you can afford. So focus on your “PITI.” That’s your Principal (pays down the amount you borrowed), Interest (the price of borrowing), (property) Taxes, and (homeowners) Insurance. Our mortgage calculator can help with these.
Depending on your type of mortgage and the size of your down payment, you may have to pay mortgage insurance, too. And that can easily run into three figures every month.
But there are other potential costs. So you’ll have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repairs and maintenance costs. There’s no landlord to call when things go wrong!
Finally, you’ll find it hard to forget closing costs. You can see those reflected in the annual percentage rate (APR) that lenders will quote you. Because that effectively spreads them out over your loan’s term, making that higher than your straight mortgage rate.
But you may be able to get help with those closing costs and your down payment, especially if you’re a first–time buyer. Read:
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 result is a good snapshot of daily rates and how they change over time.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.