Mortgage Charges In the present day, Sept. 25 & Price Forecast For Subsequent Week
Today’s mortgage and refinancing rates
Average mortgage rates rose again yesterday. Thank goodness the increase was much less steep than on Thursday. Still, on Friday night, those rates were about 10 basis points (one basis point is one hundredth of 1%) higher than a week earlier.
I suspect this Mortgage rates will continue to rise next week. But with so much new volatility, that’s really a guess.
Find and lock a cheap rate (September 25, 2021)
Current mortgage and refinancing rates
|program||Mortgage rates||Effective interest rate*||Change|
|Conventionally fixed for 30 years||3,105%||3.124%||-0.01%|
|Conventionally fixed for 15 years||2,458%||2,486%||+ 0.01%|
|Conventional 20 years old||2.98%||3,014%||-0.04%|
|Conventionally fixed for 10 years||2,394%||2,452%||Unchanged|
|30 years permanent FHA||3,107%||3,867%||Unchanged|
|15 years fixed FTA||2.52%||3.164%||+ 0.02%|
|5/1 ARM FHA||2,418%||3,068%||+ 0.04%|
|30 years of permanent VA||2.93%||3.121%||-0.04%|
|15 years fixed VA||2,679%||3,028%||Unchanged|
|5/1 ARM-VA||2,537%||2,312%||+ 0.02%|
|Prices are provided by our partner network and may not reflect the market. Your rate can be different. Click here for an individual price offer. View our rate assumptions here.|
Find and lock a cheap rate (September 25, 2021)
COVID-19 mortgage updates: Mortgage lenders are changing rates and rules due to COVID-19. To learn how the coronavirus could affect your home loan, click here.
Should You Lock A Mortgage Rate Today?
Yes, I would suggest that you lock your mortgage rate very soon. Of course there will be ups and downs in the next days and weeks.
But the forces opposing low mortgage rates seem to me to be much stronger and more successful than those who could push them down. (For my reasons, read on.)
My personal recommendations therefore remain:
- LOCK when close in 7th Days
- LOCK when close in fifteen Days
- LOCK when close in 30th Days
- LOCK when close in 45 Days
- LOCK when close in 60 Days
With so much uncertainty right now, however, your instincts could turn out to be as good as mine – or better. So let yourself be guided by your gut instinct and your personal willingness to take risks.
What is moving the current mortgage rates
Last week, I reported that 30-year fixed-rate mortgage rates were up 10 basis points in the past seven days, according to the Mortgage News Daily (MND) archives. And this week they did the same thing, increasing a total of 3.13% from 2.93% in nine calendar days.
We can possibly call this a rising short-term trend. But it hasn’t been established long enough to draw any conclusions from it.
Reason for the climb
Most commentators like to route the recent increases to the final meeting of the Federal Reserve’s monetary policy body, the Federal Open Market Committee (FOMC). That ended on Wednesday with the publication of a statement and the hosting of a press conference. Read 2% Mortgage Rates Could Go “Soon” Per Fed session for the facts.
And those commentators are right that the main driver behind the higher interest rates was likely these Fed events. But there were others, perhaps most notably the unexpected slowdown in COVID-19 infection rates.
The New York Times (Paywall) reported that the number of new cases in the US had fallen 16% in the 14 days to September 24. And they fell by 14% worldwide over this period.
That’s a big deal for the markets. One of the reasons mortgage rates were so low is that investors bought mortgage-backed securities (MBSs – the type of bond that largely determines these rates) to hedge against the economic fallout from the pandemic. And when fears subside, they’ll likely sell some of their MBS, which will drive interest rates so high.
In the meantime, there is one other factor that could drive mortgage rates higher. And that’s the political battle brewing on Capitol Hill over the debt line. If this is not resolved within a few weeks, the US government will default its debt for the first time in history. And that will almost certainly make all forms of borrowing (including mortgages) more expensive.
Could Mortgage Rates Fall Again?
Of course, it is possible that mortgage rates will still fall. But it always looks less likely.
True, it is inevitable that some days they both rise and fall. And we can have longer falls.
But I doubt we’ll get any closer to the 2021 lows no matter what happens with the pandemic. Well, almost no matter what. A new, ultra-virulent and highly contagious SARS-CoV-2 variant that forces long-term lockdowns worldwide could bring mortgage rates to new all-time lows. But let’s hope that is unlikely.
As are other possible triggers for persistently lower mortgage rates. They range from wars to major natural disasters and beyond. Yes, possible. But not likely.
And in deciding when to lock your mortgage rate on, you need to weigh potential risks and rewards. Yes, you could be wrong because neither of us can see into the future. But this weighing process will help you rather than act blindly. And it makes it easier to enjoy or live with the consequences of your decision later.
Economic reports next week
There are some important economic reports coming up next week, with Friday bringing the most important. But I suspect its impact will be barely noticeable between the aftershocks of the Fed meeting, the noise of the debt ceiling, and the brighter outlook for COVID-19.
None of the other economic reports listed below are likely to cause much movement in the markets unless they include shockingly good or bad data:
- Monday – August orders for durable and capital goods
- Tuesday – July S&P Case-Shiller House Price Index and Consumer Confidence Index in September
- Thursday – Weekly new applications for unemployment insurance until September 25th
- Friday – August core inflation along with real disposable income and real consumer spending. Also construction expenses in August. Plus September Institute for Supply Management (ISM) manufacturing index. And the consumer sentiment index for September
There is a lot going on on Friday. But will investors notice that with all the noise?
Find and lock a cheap rate (September 25, 2021)
Mortgage rates forecast for next week
My best guess is that Mortgage rates are set to rise again this week, but probably only moderately. However, given the recent volatility, this is only a guess.
Mortgage and refinancing rates usually move in parallel. And a gap that had grown between the two was largely closed with the recent abolition of the disadvantageous market refinancing fee.
And another regulatory change announced this week likely made investment property and vacation home mortgages more accessible and affordable.
This is how your mortgage rate is determined
Mortgage and refinance rates are generally determined by prices on a secondary market (similar to the stock or bond markets) that trade mortgage-backed securities.
And that depends heavily on the economy. So mortgage rates are typically high when things are going well and low when the economy is in trouble.
But you play huge roles in determining your own mortgage rate in five ways. And you can significantly affect it by:
- Find your best mortgage rate – they vary widely from lender to lender
- Boost Your Credit Score – Even a small increase can make a big difference to your rate and payments
- Save the Biggest Down Payment possible – lenders like you to have real skin in this game
- Keep Your Other Borrowings Modest – The lower your other monthly obligations, the higher the mortgage you can afford
- Choose Your Mortgage Carefully – Are You Better Off With a Conventional, FHA, VA, USDA, Jumbo, or Other Loan?
The time you spend getting these ducks in a row can result in you winning lower prizes.
Remember, it’s not just a mortgage rate
Make sure to count all of the upcoming home costs when figuring out how much a mortgage you can afford. So concentrate on your “PITI”. This is yours P.rincipal (pays back the amount borrowed), IInterest (the price of borrowing), (property) TAxles and (homeowners) IInsurance. Our mortgage calculator will help you with this.
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 reach three digits every month.
But there are other potential costs as well. So you have to pay community contributions if you choose to live with an HOA. And wherever you live, you have to expect repair and maintenance costs. There is no landlord to call if something goes wrong!
Eventually, you will find it hard to forget about closing costs. You can see this in the specified annual percentage rate (APR). Because this effectively spreads it out over the life of your loan and makes it higher than your pure mortgage rate.
However, you may be able to get help with these closing costs and your down payment, especially if you are a first-time buyer. Read:
Down payment assistance programs in each state for 2021
Mortgage rate methodology
The mortgage report receives interest rates from several credit partners on a daily basis according to selected criteria. We’ll find an average interest rate and an APR for each type of loan shown on our chart. By averaging a number of rates, this will give you a better idea of what you might find in the market. In addition, we determine average interest rates for the same types of credit. For example FHA fixed with FHA fixed. The result is a good snapshot of the daily rates and how they change over time.