Mortgage Charges Right this moment, June 26, & Price Forecast For Subsequent Week
Today’s mortgage and refinancing rates
Average mortgage rates were unchanged yesterday. So they are a little lower than they were a week ago. But much higher than two weeks ago.
I don’t expect mortgage rates to move much next week. Overall, it seems likely that they will gently drift upward for some time. But there are sure to be good weeks during this period. Whether those prices are slightly higher or lower next Saturday makes only a tiny difference to your monthly payments or closing costs.
However, the monthly report on the employment situation is due to appear next Friday. And that’s more than capable of moving markets and mortgage rates. So if this contains data that shock investors, events may overtake my forecast for next week.
Find and lock a cheap rate (June 26, 2021)
Current mortgage and refinancing rates
|program||Mortgage rates||Effective interest rate*||change|
|Conventionally fixed for 30 years||2,936%||2,936%||Unchanged|
|Conventionally fixed for 15 years||2,255%||2,255%||Unchanged|
|Conventional 20 years old||2.75%||2.75%||Unchanged|
|Conventional 10 year fixed year||1.956%||2%||+ 0.02%|
|30 years permanent FHA||2,809%||3,466%||+ 0.03%|
|15 years fixed FTA||2.62%||3,222%||-0.04%|
|5 years ARM FHA||2.5%||3.22%||Unchanged|
|30 years of permanent VA||2,375%||2,547%||Unchanged|
|15 years fixed VA||2.25%||2,571%||Unchanged|
|5 years ARM-VA||2.5%||2,399%||Unchanged|
|Prices are provided by our partner network and may not reflect the market. Your price can be different. Click here for an individual price offer. View our rate assumptions here.|
Find and lock a cheap rate (June 26, 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, we have a better week on mortgage rates than we did seven days ago. But it wasn’t as good as I had hoped. Often there are worthwhile declines after steep climbs. But this one has hardly registered.
Meanwhile, these rates remain exceptionally low by historical standards. But there is almost consensus among those who follow them most closely that they will drift upward in the months ahead. And I think there could be a sharp increase later in the year – possibly as early as late July.
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
In yesterday’s article I quoted a statement from Freddie Mac on Thursday. It said:
If the economy continues and inflation remains high, we expect interest rates to continue to rise gradually in the second half of the year.
I’ve been saying something similar for a long time. Booming economies tend to bring higher mortgage rates. And the current boom is likely to be the strongest since Ronald Reagan was in the Oval Office.
And others agree. Fannie Mae and the Mortgage Bankers Association (MBA) expect these rates to rise gradually over the course of 2021. Both assume they will hit an average of 3.0% in the current quarter, which is almost over. And Fannie thinks they’ll end the year at 3.2%.
However, the MBA expects an increase of 3.5% in the final quarter – and 3.7% in the first three months of 2022.
The Fed (inevitable)
My guess is that the MBA anticipates (and ignores Fannie) a possible move by the Fed to slow their security purchases, which are currently $ 40 billion a month in mortgage-backed securities. It is this buying frenzy that is currently keeping mortgage rates artificially low.
Pressure is growing on the Fed to cut back on its purchases anytime soon. Yes, it is possible that this will be announced at the end of July. But smart money seems more likely sometime between late August and December.
Of course, smart money is often wrong. But this time I suspect it’s right.
And if that Fed announcement happens, mortgage rates will likely rise quickly. Because the last time she said she would slowly reduce asset purchases (in Fed speaking), mortgage rates rose in 2013 from 3.35% on the 2nd for 2013.
If the reactions in the markets are similar this time around, even the MBA may underestimate the change.
Nothing is inevitable
All of this seems likely to me. But I have to acknowledge that nothing is inevitable.
However, it would likely require a terrible disaster (natural or otherwise) stifling economic recovery to prevent this scenario from happening.
Of course, the schedule for events is always unpredictable. But it would take something massive – and relatively improbable – to prevent this from happening.
Economic reports next week
At the moment, the markets are obsessed with two economic indicators: inflation and employment. This week, employment is in the spotlight. The official employment report coming out on Friday is arguably the most important monthly data on the calendar. And it is always able to set off fireworks.
But the others listed below are unlikely to cause big moves in the markets unless they include shockingly good or bad data. Additionally, regular readers know that the markets have ignored most of the economic reports in the past few months. Therefore, the effects of the following may differ from the usual ones:
- Tuesday – April S&P CoreLogic Case-Shiller House Price Index. Plus June consumer confidence index
- Wednesday – June ADP Employment Report
- Thursday – June Institute for Supply Management (ISM) production index. And May construction expenses. Plus weekly new unemployment insurance claims until June 26th
- Friday-June Official Employment Report, which includes non-farm payroll, unemployment rate and average hourly wage. Also May trade deficit plus factory orders
It’s Friday again to watch.
Find and lock a cheap rate (June 26, 2021)
Mortgage rates forecast for next week
Assuming that the employment report is complete and that nothing gets out of hand, we could face a period of calm. And my best guess is that Mortgage rates can stay stable or near stable next week.
Mortgage and refinancing rates usually move in parallel. Note, however, that the refinancing rates are currently slightly higher than those for buying mortgages. This gap will likely stay pretty constant as it changes.
Meanwhile, a recent regulatory change has made most investment property and vacation home mortgages more expensive.
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. You can significantly influence 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 end result is a good snapshot of the daily rates and how they change over time.