Today’s mortgage and refinance rates
Average mortgage rates inched lower yesterday, returning them to their recent all-time low. That had looked unlikely first thing, but markets turned tail later that day.
Mortgage rates may be in for another, similarly quiet day with markets looking becalmed. But that calm may be occurring before a storm. Read on to discover something that just might push these rates higher within days.Find and lock a low rate (Jan 12th, 2021)
Current mortgage and refinance rates
|Conventional 30 year fixed||2.75%||2.75%||Unchanged|
|Conventional 15 year fixed||2.37%||2.37%||-0.07%|
|Conventional 5 year ARM||3%||2.743%||Unchanged|
|30 year fixed FHA||2.25%||3.226%||Unchanged|
|15 year fixed FHA||2.188%||3.128%||-0.13%|
|5 year ARM FHA||2.5%||3.226%||Unchanged|
|30 year fixed VA||2.063%||2.232%||Unchanged|
|15 year fixed VA||2%||2.319%||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.|
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?
My simple suggestion holds: lock if you’re closing in January. But float if you’re closing later.
I think we may see yet lower rates in coming months as the logistical challenges of rolling out vaccines (and the possibility of vaccine-resistant virus variants emerging) dawn on investors.
Several countries are now in — or are planning — strict new lockdowns as more transmissible variants spread quickly. The variant first spotted in the UK is already reported to be in the US.
But January might see higher mortgage rates. Investors want bigger pandemic relief programs. And they might get those very quickly if both Democratic candidates win in today’s Senate runoffs in Georgia.
If that happens (and FiveThirtyEight’s poll of polls give those candidates small leads over their Republican rivals), mortgage rates might rise — perhaps appreciably and for some time.
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
- FLOAT if closing in 45 days
- FLOAT if closing in 60 days
But 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 held steady at 0.94%. (Neutral 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 modestly higher on opening. (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 happens when indexes are lower
- Oil prices rose to $49.31 from $48.38 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 edged up to $1,949 from $1,944 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 — Inched up to 55 from 54 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 they’re looking likely to move little today.
Find and lock a low rate (Jan 12th, 2021)
Important notes on today’s mortgage rates
Here are some things you need to know:
- 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. So expect short-term rises as well as falls. And read “For once, the Fed DOES affect mortgage rates. Here’s why” if you want to understand this aspect of what’s happening
- 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
- Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
- 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
- When rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
- Refinance rates are typically close to those for purchases. But some types of refinances from Fannie Mae and Freddie Mac are currently appreciably 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?
I’m expecting mortgage rates to hold steady today, or just inch either side of the neutral line.
As already discussed, today’s Senate runoffs in Georgia might prove critical to mortgage rates. If one or both Republican candidates win, we can stand down because little will change.
But if both Democratic candidates win, that would give their party a clean sweep of the Senate, House and White House. And, in that event, President-elect Joe Biden has already promised $2,000 checks very soon after his inauguration.
Investors want that and markets will likely respond to the result. Having said that, investors certainly don’t want the higher taxes that such an outcome could bring. So I may be overestimating the impact of the runoffs.
However, there’s a chance today could be a turning point for mortgage rates. Of course, it may not end up that way. But those rates are already at record lows. Is it worth the gamble of riding this one out?
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 Dec. 24. And on New Year’s Eve Freddie reported its weekly average was imperceptibly higher (one-hundredth of 1%) than the previous week.
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:
So predictions vary considerably. You pays yer money …
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:
Verify your new rate (Jan 12th, 2021)
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.