Today’s mortgage and refinance rates
Average mortgage rates nudged lower yesterday. It was the first fall for more than a week. And it wasn’t big enough to make much difference. But it was still welcome and keeps these rates in the ultralow range.
Later, President-elect Joe Biden is due to unveil his stimulus spending plans “in the trillions of dollars,” something that should push mortgage rates higher. However, this morning’s employment numbers were dire, something that should drag them lower. That clash is the current rate scenario in microcosm.
Right now, it looks as if mortgage rates might inch lower today. But that could well change as the hours pass.Find and lock a low rate (Jan 14th, 2021)
Current mortgage and refinance rates
|Conventional 30 year fixed||2.75%||2.75%||+0.06%|
|Conventional 15 year fixed||2.425%||2.425%||+0.13%|
|Conventional 5 year ARM||3%||2.743%||Unchanged|
|30 year fixed FHA||2.495%||3.473%||Unchanged|
|15 year fixed FHA||2.5%||3.442%||Unchanged|
|5 year ARM FHA||2.5%||3.226%||Unchanged|
|30 year fixed VA||2.375%||2.547%||-0.06%|
|15 year fixed VA||2.188%||2.508%||-0.06%|
|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?
Unfortunately, it’s still too soon to call the likely direction of mortgage rates over the coming weeks and months. So floating your rate continues to be a gamble. Read on for more information about the conflicting forces that are acting on rates.
So mortgage rates could go up or down over the foreseeable (or, rather unforeseeable) future. But, for now, my personal rate lock recommendations, which are only my hunches, 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 a snapshot of 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 inched down to 1.10% from 1.11%. (Good 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 all 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 held steady at $52.75 a barrel. (Neutral for mortgage rates* because energy prices play a large role in creating inflation and also point to future economic activity.)
- Gold prices nudged lower to $1,847 from $1,854 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 — Edged down to 68 from 70 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. 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 fall a little today.
Find and lock a low rate (Jan 14th, 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. 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 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?
I’m expecting mortgage rates to fall just a bit today. But there’s a lot going on and that may change during the day.
Here are the two conflicting forces that I referred to earlier and that are acting on mortgage rates:
1. Higher government borrowing
Higher government borrowing almost always leads to higher yields on US Treasurys and mortgage rates. And it looks as if we’re in for some seriously high deficits, running into trillions of dollars.
President-elect Biden is set to announce his incoming administration’s spending plans later today. That’s likely to focus investors’ minds on the tsunami of Treasury bonds that will be heading onto the market. And it’s why, overnight, mortgage rates looked likely to rise today. But then the second conflicting force intervened …
Because it’s impossible to ignore the continuing economic toll of the pandemic. After the first wave in the spring, the economy began to recover, though not enough to bounce back to its pre-COVID-19 levels.
But the current second wave is even more deadly and economically harmful than the first. And bad economic times almost always bring low mortgage rates.
We saw with last week’s December employment data how deep those scars are. And this morning’s worse-than-expected weekly new claims for unemployment insurance (nearly a million) reinforce that message. So far this morning, that bad news seems to be outweighing the prospect of higher government borrowing.
Today’s the ideal day to understand this conflict. Because we’re witnessing it in real time.
So those are the conflicting and very powerful forces currently acting on mortgage rates. It’s just possible that they’ll cancel each other out. But it’s probably more likely that a tussle between the two will last for several months, perhaps until vaccines finally turn the pandemic’s tide.
And events might create yet more volatility. A new, vaccine-related strain of the coronavirus, might, for example, push rates significantly lower. But yet more demands on the public purse could push them higher.
So this uncertainty could last a long time. And it may bring some unusual volatility along the way.
Today is a good one to witness that battle in action.
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, as today’s announcement from Freddie confirms.
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:
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 normally do. 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:
Verify your new rate (Jan 14th, 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.