Today’s Mortgage and Refinance Rates
Average mortgage rates rose slightly yesterday. But that doesn’t reflect the whole week. That was bad for those rates, pushing them to their highest levels in nearly three years.
Again I predict that mortgage rates could rise next week. But we are in a volatile time and the recipe for every prediction contains cups of speculation.
Current mortgage and refinance rates
|30-year fixed conventional||4.24%||4.262%||+0.01%|
|15-year fixed conventional||3.592%||3.626%||+0.01%|
|20-year fixed conventional||4.138%||4.175%||Unchanged|
|10-year fixed conventional||3.565%||3.627%||+0.05%|
|30-year fixed FHA||4.308%||5.097%||-0.02%|
|15-year fixed FHA||3.779%||4.439%||+0.02%|
|30-year fixed PV||4.264%||4.476%||-0.02%|
|15-year fixed VA||3.5%||3.833%||+0.01%|
|Pricing is provided by our partner network and may not reflect the market. Your rate may be different. Click here for a personalized quote. See our rate assumptions here.|
Should you lock in a mortgage rate today?
I would lock in my rate on the first morning when mortgage rates look likely to rise. Recently it was most mornings.
Of course, you risk missing out on future falls. But I expect a lot more ups than downs. And continuing to float your rate over several days or weeks is, I believe, very risky.
Yes, events could prove me otherwise. It would not be the first time. But I doubt they will this time.
So my personal rate lock recommendations remain:
- LOCK if closing 7 days
- LOCK if closing 15 days
- LOCK if closing 30 days
- LOCK if closing 45 days
- LOCK if closing 60 days
However, with so much uncertainty right now, your instincts could easily turn out to be as good as mine, or even better. So let your instincts and personal risk tolerance guide you.
What’s Moving Current Mortgage Rates
The Federal Open Market Committee (FOMC) of the Federal Reserve begins a two-day meeting next Tuesday. And it will release a report at 2 p.m. ET the next day (March 16), with a press conference scheduled 30 minutes later.
This is potentially very important. The FOMC is the Fed’s monetary policy committee and has enormous influence over the entire economy, including mortgage rates. And his focus at the moment is how to reduce inflation.
We know the views of Fed Chairman Jerome Powell on March 2-3 because he testified before House and Senate committees on those days. The report and the press conference next Wednesday will tell us if the events in Ukraine and his colleagues at the meeting succeeded in changing his mind.
What Powell predicted
When testifying on Capitol Hill, Mr. Powell made comments in two areas that are particularly relevant to both inflation and mortgage rates. He expected that:
- The federal funds rate will increase by 0.25% next Wednesday – This will drive up rates on almost all variable rate borrowings. But we expected it since January
- The FOMC would not release its plans to sell its vast stock of bonds next week. But he was working on those plans and Mr Powell would reveal them soon
Mortgage rates are not directly affected by changes in the federal funds rate. But the rises and falls of this rate tend to influence them in the long term.
However, mortgage rates will almost certainly be directly affected by the Fed’s plans to sell its stock of mortgage-backed securities (MBS). It is the type of bond that largely determines these rates. And the Fed owned $2.69 trillion value of them from Wednesday.
These mortgage bonds are like any other bond. The less you pay for the same fixed income, the higher your return. It is a mathematical fatality. And it is MBS yields that are directly linked to mortgage rates.
So when the Fed starts offloading its mortgage obligations, yields and mortgage rates will rise. Because all that extra supply will drive prices down and increase yields. It’s just supply and demand in action.
Of course, if the Fed were to dump all of its $2.69 trillion in MBS all at once, mortgage rates would skyrocket and orbit. But it won’t because it’s not stupid. Instead, it will sell them off as quickly as the markets can absorb them without destabilizing them.
What to expect next Wednesday
Of course, the Fed has been pointing all this out for months. And the markets already know the things I outlined above.
This is why mortgage rates have been rising for much of this year and why investors have already priced current expectations into MBS prices. Indeed, the pain ahead may prove mild compared to what we have already endured.
But next Wednesday could provide more information that could drive those rates up or (probably briefly) down. Although there have been no new announcements since Mr. Powell’s recent testimony, markets will be on the lookout for changes in tone and emphasis. And they will want to know if the Fed:
- Seems more aggressive (“hawkish”) or less (“dovish”) when talking about his anti-inflationary measures, including rate hikes and bond sales
- Appears frightened by the war in Ukraine and in what way. If he fears Russian aggression could tip the world into a global recession, he may be more conciliatory. But if he’s more fearful of the extra inflation the conflict creates, he might be more hawkish.
The way the Fed “sounds” and “appears” may seem barely remarkable to you and me. But, believe me, investors will be analyzing in detail every word written and spoken by Mr. Powell and his colleagues on Wednesday afternoon.
Economic reports next week
There are a few important economic reports on the calendar for next week. Wednesday sees the release of retail sales figures for February. And Tuesday and Wednesday bring some future inflation indicators with the producer price index and the import price index.
But Wednesday’s FOMC report and press conference (see above) should dominate the week.
The potentially most important reports below are highlighted in bold. The others are unlikely to move the markets much unless they contain surprisingly good or bad data.
- Tuesday – February producer price index
- Wednesday – FOMC Events. More retail sales and import price indexboth for february
- Thursday – February Housing starts and building permits. Plus weekly new claims for unemployment insurance through March 12
- Existing Home Sales Friday through February
Wednesday is the day to watch.
Mortgage interest rate forecast for next week
I suspect that mortgage rates could rise next week. But it all depends on Wednesday’s FOMC meeting. If it’s accommodating, we might see drops, though I doubt they’ll last long. If it’s hawkish, expect more upside.
Mortgage and refinance rates generally move in tandem. And the removal of unfavorable market refinancing charges last year has largely eliminated the 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 expensive.
How your mortgage interest rate is determined
Mortgage and refinance rates are typically determined by prices in a secondary market (similar to stock or bond markets) where mortgage-backed securities are traded.
And it depends heavily on the economy. Thus, mortgage rates tend to be high when things are going well and low when the economy is struggling.
But you play an important role in determining your own mortgage rate in five ways. And you can affect it significantly by:
- Find your best mortgage rate – They vary widely between lenders
- Boost your credit score – Even a small bump can make a big difference to your rate and payments
- Save the biggest down payment possible – Lenders like you have real skin in this game
- Keep your other borrowings small – The lower your other monthly commitments, the higher the mortgage you can afford
- Choose your mortgage carefully – Are you better off with a conventional, conforming, FHA, VA, USDA, jumbo or other loan?
Time spent getting these ducks in a row can earn you lower rates.
Remember it’s not just a mortgage rate
Be sure to factor in all of your homeownership costs when calculating how much mortgage you can afford. So focus on your “PITI”. It’s your Pprincipal (repays the amount you borrowed), IInterest (the price of the loan), (the property) Jaxes, and (owners) Iassurance. Our mortgage loan calculator can help you.
Depending on your type of mortgage and the amount of your down payment, you may also need to pay for mortgage insurance. And that can easily hit three figures every month.
But there are other potential costs. So you will have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repair and maintenance costs. There is no owner to call when things go wrong!
Finally, you will have a hard time forgetting closing costs. You can see those reflected in the annual percentage rate (APR) that lenders will quote you. Because it spreads them effectively over the term of your loan, making it higher than your normal mortgage rate.
But you may be able to get help with those closing costs. and your down payment, especially if you are a first-time buyer. Read:
Down payment assistance programs in every state for 2021
Mortgage Rate Methodology
Mortgage reports receive daily rates based on selected criteria from multiple lending partners. We arrive at an average rate and APR for each loan type to display in our chart. Because we average a range of prices, it gives you a better idea of what you might find in the market. In addition, we average the rates for the same loan types. For example, fixed FHA with fixed FHA. The result is a good overview of the daily rates and their development over time.
The information contained on The Mortgage Reports website is provided for informational purposes only and does not constitute advertising 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 company or affiliates.