Mortgage and refinance rates today, January 12, 2021
Today’s mortgage and refinance rates  Average mortgage rates held steady yesterday. And that was a pleasant surprise because they’d looked likely to rise again first thing — and also because […]

Today’s mortgage and refinance rates 

Average mortgage rates held steady yesterday. And that was a pleasant surprise because they’d looked likely to rise again first thing — and also because it had been a week since they last fell. Still, by any standards, they remain very low.

However, those mortgage rates may rise today. As CNBC put it earlier, “U.S. Treasury yields continued to climb on Tuesday morning, as traders eyed the possibility of further economic stimulus and the situation with U.S. politics.” And mortgage rates often shadow those yields.

Find and lock a low rate (Jan 13th, 2021)

Current mortgage and refinance rates 

Program Mortgage Rate APR* Change
Conventional 30 year fixed 2.813% 2.813% Unchanged
Conventional 15 year fixed 2.375% 2.375% Unchanged
Conventional 5 year ARM 3% 2.743% Unchanged
30 year fixed FHA 2.5% 3.478% Unchanged
15 year fixed FHA 2.438% 3.38% Unchanged
5 year ARM FHA 2.5% 3.226% Unchanged
30 year fixed VA 2.375% 2.547% Unchanged
15 year fixed VA 2.25% 2.571% Unchanged
5 year ARM VA 2.5% 2.406% 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.
Find and lock a low rate (Jan 13th, 2021)

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?

Let’s be honest. I can be of very little help over this right now. Because mortgage rates could go either way in the coming days, weeks and months. And, with so much currently unknowable, making predictions is a mug’s game.

But I can explain what’s going on. So read on to find out about the competing forces that are trying to push these rates higher and lower at the same time.

And, for now, my personal rate lock recommendations (my best guesses) are:

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

Still, 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 gut and your personal tolerance for risk.

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 rose to 1.17% from 1.13%. (Bad 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 mixed on opening. (Neutral 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 rose to $52.73 from $51.66 a barrel. (Bad for mortgage rates* because energy prices play a large role in creating inflation and also point to future economic activity.) 
  • Gold prices inched higher to $1,845 from $1,839 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 — Climbed to 70 from 61 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. 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. But, with that caveat, so far mortgage rates look set to move higher.

Find and lock a low rate (Jan 13th, 2021)

Important notes on today’s mortgage rates

Here are some things you need to know:

  1. The Fed’s ongoing interventions in the mortgage market (way over $1 trillion) should put continuing downward pressure on these rates. But it can’t work miracles all the time. And read “For once, the Fed DOES affect mortgage rates. Here’s why” if you want to understand this aspect of what’s happening
  2. 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
  3. Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
  4. 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
  5. When rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
  6. Refinance rates are typically close to those for purchases. But some types of refinances are higher following a regulatory change

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?

Today

I’m expecting mortgage rates to rise today.

So what are these competing forces that are trying to push mortgage rates higher and lower at the same time?

Pandemic

Well, on the one hand, is the pandemic. It’s hard to overstate just how damaging this is, both to the health of the nation and to the US and global economies. Records are being set for new infections, hospitalizations and deaths almost every day. And we’re just beginning to see economic reports hinting at the financial devastation its second wave is wreaking.

Normally, all rates — including those for mortgages — are low during bad economic times. And, until last week, I was confidently predicting lower mortgage rates for months to come.

More government spending

So what changed last week? Well, the Democratic Party achieved a clean sweep across the White House, the Senate and the House. And it, according to President-elect Joe Biden, plans to spend “trillions” on stimulus measures.

But such spending will mean hugely increased government borrowing. And that will inevitably significantly increase the supply of US Treasury bonds. You don’t need me to remind you that increasing the supply of any product, tends to reduce its price. But, with bonds, lower prices invariably mean higher yields. Given that mortgage bonds compete with — and their rates typically shadow yields on — Treasuries, they too will experience pressure to rise.

So will the pandemic’s downward pressure outweigh the added borrowing’s upward pressure? Or vice versa? Literally, nobody knows.

We’ll obviously be monitoring how this plays out. And, once a trend becomes clear, you’ll be the first to know.

Recently

Over the last several months, the overall trend for mortgage rates has clearly been downward. And a new, weekly all-time low was set on 16 occasions last year, according to Freddie Mac.

The most recent such record occurred on Jan. 7. But that had already been overtaken by events, even before it was published. And rates are now appreciably higher.

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 each quarter of 2021 (Q1/21, Q2/21, Q3/21 and Q4/21).

However, note that Fannie’s (released on Dec. 15) and the MBA’s (Dec. 21) are updated monthly. But Freddie’s are now published quarterly. And its latest was released on Oct. 14. So that’s looking distinctly stale.

The numbers in the table below are for 30-year, fixed-rate mortgages:

Forecaster Q1/21 Q2/21 Q3/21 Q4/21
Fannie Mae 2.7% 2.7% 2.8% 2.8%
Freddie Mac 3.0% 3.0% 3.0% 3.0%
MBA 2.9% 3.0% 3.2% 3.2%

But these predictions were made before the Democratic Party achieved a clean sweep of both houses of Congress and the White House. And before the pandemic became even more virulent. So they may change more this month than they do normally. And, given so many current unknowables, they may be even more speculative than usual.

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.

Verify your new rate (Jan 13th, 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.


Source: themortgagereports.com