Mortgage And Refinance Charges As we speak, Aug. 11
Today’s mortgage and refinance rates
Average mortgage rates moved higher again yesterday. Each recent rise has been moderate or modest. But they’re beginning to add up. Still, those rates remain exceptionally low by almost all standards.
So far this morning, it’s looking as if mortgage rates today might rise again. But inflation data, published at 8:30 a.m. (ET), might yet cause them to hold steady or even inch lower.
Find and lock a low rate (Aug 11th, 2021)
Current mortgage and refinance rates
|Conventional 30 year fixed||2.865%||2.865%||+0.03%|
|Conventional 15 year fixed||2.012%||2.012%||+0.01%|
|Conventional 20 year fixed||2.625%||2.625%||+0.13%|
|Conventional 10 year fixed||1.901%||1.947%||+0.02%|
|30 year fixed FHA||2.734%||3.39%||+0.01%|
|15 year fixed FHA||2.431%||3.032%||Unchanged|
|5/1 ARM FHA||2.5%||3.22%||Unchanged|
|30 year fixed VA||2.375%||2.547%||Unchanged|
|15 year fixed VA||2.25%||2.571%||Unchanged|
|5/1 ARM VA||2.5%||2.399%||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 (Aug 11th, 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?
We’ve now had rises on five consecutive business days. And they haven’t been small ones, though none has been sharp.
It’s too soon to say with any certainty that last week was a tipping point that will reverse the recent downward trend in mortgage rates. But it certainly might be. And you need to recognize the heightened risk of continuing to float your rate.
If the rises continue, I’ll change my personal rate lock recommendations very soon. But, for now, they’re:
- 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
However, I don’t claim perfect foresight. And your personal analysis could turn out to be as good as mine — or better. So you might choose to be guided by your instincts 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 roughly the same time yesterday, were:
- The yield on 10-year Treasury notes rose to 1.36% from 1.32%. (Bad for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields
- Major stock indexes were mostly higher shortly after 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 may happen when indexes are lower
- Oil prices were barely changed at $67.61 from $67.55 a barrel. (Neutral for mortgage rates*.) Energy prices play a large role in creating inflation and also point to future economic activity.
- Gold prices climbed to $1,742 from $1,724 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 higher to 41 from 40 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. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.
So use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, so far mortgage rates today look likely to move higher. But be aware that “intraday swings” (when rates change direction during the day) are a common feature right now.
Find and lock a low rate (Aug 11th, 2021)
Important notes on today’s mortgage rates
Here are some things you need to know:
- 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 daily 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. And a recent regulatory change has narrowed a gap that previously existed
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 and soon
This morning’s consumer price index (CPI) showed inflation continuing at a 13-year high. The year-over-year increase of 5.4% was slightly higher than analysts had forecast. And that might have pushed mortgage rates higher still.
However, at +3.4% year over year, “core CPI” (CPI with volatile energy a food prices stripped out) was a little lower than expected. And that seemed to put a brake on higher mortgage rates.
But it sometimes takes markets a while to digest such figures. So don’t bank on early reactions lasting the day.
Rises to come?
Yesterday evening, CNBC ran a story under the headline, “Rising bond yields could be tied to recent comments from Federal Reserve officials” (paywall).
This won’t come as a surprise to regular readers. I’ve been warning this might happen for weeks. And, in recent days, have wondered whether it’s already started.
What’s this got to do with mortgage rates? Well, they’re largely determined by trading in a particular type of bond called a mortgage-backed security (MBS). It’s true that other factors (supply and demand for loans, for example) can influence those rates, too. But they’re basically tied to yields on MBSs.
Is the mystery over?
For months, bond yields have been moving as if the economy were in a recession, while it’s actually in a boom. Observers say this is because investors are scared that the new wave of the Delta variant might undermine the economic recovery. But there’s been very little correlation between worrying COVID-19 news and changes in bond yields. And investors have shrugged off much of the overwhelmingly positive economic data.
So, many have been mystified by why bond markets have been acting as they have. I’m one of them.
There was always likely to be a tipping point when investors finally accepted that the recovery was real and that nothing the coronavirus could throw at it was likely to significantly harm it. And it may well be that last Friday’s employment report created that tipping point.
If it did, mortgage rates should be rising. They’re typically higher when the economy’s doing well.
The Fed’s likely taper
That CNBC headline refers to a second influence that could push mortgage rates higher. The Federal Reserve is currently supporting the recovery buy buying assets at a rate of $120 billion a month. And one-third of that is being spent on MBSs. That’s keeping mortgage rates artificially low.
Everyone accepts that the Fed can’t keep this up forever. But two top officials said last week that they’d back a Sept. 22 announcement. And two others more vaguely said they’d support an early one. That’s much sooner than was previously expected.
If history repeats itself, such an announcement would lead to sharply higher mortgage rates. At least, that’s what happened when the Fed last made a similar announcement, back in 2013. Maybe circumstances are different now. But you’d have to be brave to bet your next mortgage rate on that being the case.
And investors won’t necessarily wait for that announcement to be made. Once they’re convinced that one is imminent, they’re likely to act as if it had already been made. Indeed, that may be what’s happening now. And it would explain that CNBC headline.
Of course, nothing’s certain. Indeed, if anything defines the last couple of years, it’s uncertainty. And it’s perfectly possible that something catastrophic will arise that sends mortgage rates plummeting again.
Indeed, they may yet resume their gentle falls without that catastrophe. We’ve had only five business days of rising rates. And that’s way too short a time on which to base predictions.
But, to my mind, the risks to low rates are piling up. And, if the recent rate rises continue, I’ll soon be back to urging you to lock soon. In the meantime, it’s up to you to make your own analysis of the risks and rewards of floating.
For more background, read Saturday’s weekend edition of this column.
Mortgage rates and inflation: Why are rates going up?
Over much of 2020, the overall trend for mortgage rates was clearly downward. And a new, weekly all-time low was set on 16 occasions last year, according to Freddie Mac.
The most recent weekly record low occurred on Jan. 7, when it stood at 2.65% for 30-year fixed-rate mortgages. But then the trend reversed and rates rose.
However, those rises were mostly replaced by falls since April, though typically small ones. Freddie’s Aug. 5 report puts that weekly average at 2.77% (with 0.6 fees and points), down from the previous week’s 2.80%. But that report didn’t take into account rises on that Wednesday, Thursday and Friday. And this Thursday’s report will likely show an appreciable rise.
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 rate forecasts for the remaining quarters of 2021 (Q3/21 and Q4/21) and the first two quarters of 2022 (Q1/22 and Q2/22).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on July 19, Freddie’s on July 15 and the MBA’s on July 21.
However, given so many unknowables, the current crop of forecasts might be even more speculative than usual.
All these forecasts expect higher mortgage rates soon. But the differences between the forecasters are stark. And it may be that Fannie isn’t building in the Federal Reserve’s tapering of its support for mortgage rates while Freddie and the MBA are.
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 (Aug 11th, 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.