Mortgage rates and refinancing today
Yesterday average mortgage rates rose significantly. The terrible start to 2022 has continued, despite two noteworthy falls. These rates have returned to their highest level in two years.
There may be some relief on Monday morning, thanks to amicable moves in the markets yesterday that came too late for lenders to adjust their rate tags. But I expect it Mortgage rates may rise next week. Of course, the future is never certain.
Find and Close Low (Jan 15, 2022)
Current Mortgage and Refinancing Rates
|a program||Mortgage rate||April *||change|
|Traditional fixed for 30 years||3.733%||3.755%||+ 0.09%|
|Fixed traditional for 15 years||3.069%||3.107%||+ 0.07%|
|Fixed 20 year old||3.477%||3.516%||+ 0.12%|
|Conventional fixed for 10 years||3.01%||3.083%||+ 0.07%|
|30 Years Fixed FHA||3.786%||4.56%||+ 0.02%|
|15 Years FHA Fixed||3.078%||3.729%||+ 0.04%|
|5/1 ARM FHA||3.574%||3.868%||+ 0.02%|
|30 years constant VA||3.65%||3.848%||+ 0.13%|
|15 years constant VA||3.229%||3.57%||-0.18%|
|5/1 ARM VA||3.035%||2.832%||+ 0.1%|
|Prices are provided by our partner network, and may not reflect the market. Your evaluation may be different. Click here for a personal price quote. See our defaults rate here.|
Find and Close Low (Jan 15, 2022)
Should You Lock Your Mortgage Rate Today?
I would close my mortgage rate if I were you. Because I think it’s likely that these rates will continue to rise for some time to come – perhaps several months or more.
Of course, I may be proven wrong. No one can predict the future with confidence. But it seems to me that the forces exerting upward pressure on prices are strong and sustainable. Unless something critical appears.
So my personal price lock recommendations remain as follows:
- a lock If closed in 7 days
- a lock If closed in 15 days
- a lock If closed in 30 days
- a lock If closed in 45 days
- a lock If closed in 60 days
However, with so much uncertainty right now, your instincts can easily become as good as my instincts – or better. So let your gut and your personal tolerance for risk guide you.
What is driving current mortgage rates
How are mortgage rates rising while the variable Omicron wreaks havoc on the US and global economy? Sure, they will naturally fall off.
Yes. But investors are looking ahead and betting that Omicron, within a short time, will become less prevalent in the United States and leave higher levels of COVID-19 immunity in the population. Economically, the pain the alternative is causing now will make the country much stronger.
This is far from a stable science. But we can already see that Omicron usually spreads through the population very quickly and that most people have mild, if any, symptoms. Of course, unfortunately, some suffer greatly, and relatively few die.
What the UK can tell us about Omicron
The United Kingdom was one of the first developed countries to be hit by Omicron. It reported its first two cases on November 27, 2021. As of yesterday, the number of daily infections has decreased to 99,652 from 17,8250 seven days ago.
It is true that hospitalization and death rates are still on the rise. But that’s because there are unavoidable lags between infection, the need for hospital treatment, and, in relatively rare cases, death.
Of course, the United Kingdom and the United States cannot be compared directly. The proportion of the UK population who has had two or more vaccinations is significantly higher than here.
And people in the UK are somewhat more dense on their small island, which means viruses are likely to spread more quickly. The population density of America is 84.2 people per square mile. The population of the United Kingdom is 679 people per square mile.
But the UK experience seems to support the hypothesis that Omicron will spread rapidly in the population and then quickly fade away. What we can’t be sure of yet is the level of protection the infection offers against further infections, and other variables and especially any new ones that emerge.
However, early signs are encouraging. Investors are not overly optimistic in betting on a pandemic that looks much better in the spring.
Indeed, if all goes well, we may see the beginning of the end of the epidemic. And COVID-19 may soon turn from a pandemic into an endemic disease, similar to seasonal influenza.
Other pressures on mortgage rates
Meanwhile, the forces trying to raise mortgage rates remain high. Arguably, inflation is the leading of these.
Earlier this week, we saw the CPI rise to its highest level last seen in 1982. The PPI indicates that inflationary pressures are getting stronger rather than weaker. This alone should push mortgage rates higher.
But, also this week, the Federal Reserve made it clear that it plans to play hardball with inflation. That could mean four rate hikes this year, each of which will likely affect all variable rate loans.
Some think the Fed is talking too much about winning time. But it will have to meet expectations over time.
We already know that the Fed is planning to end its March program that keeps mortgage rates artificially low. It achieved this by purchasing industrial quantities of mortgage-backed securities (MBSs), a type of bond that largely determines those rates.
Now, we are faced with the possibility of not only stopping this program, but also in reverse. If the Fed starts selling some of those MBS (the MBS holdings are worth $2.6 trillionLater in the year, mortgage rates can rise significantly.
In the meantime, I expect them to rise somewhat gently. However, there is always the possibility that they will fall. It seems unlikely. But some unexpected event of crushing significance may turn things around.
Economic reports next week
We have a light week for upcoming economic reports. And none of the items listed below are likely to cause much movement in the markets unless they include shockingly good or bad data:
- Tuesday – National Association of Home Builders (NAHB) Index
- Wednesday – December Building and housing permits
- Thursday – December Existing Home Sales. Plus new weekly unemployment insurance claims through January 15
- Friday – December Leading Economic Indicators
We may be in for a quiet week in terms of economic reports.
Find and Close Low (Jan 15, 2022)
Mortgage interest rates forecast next week
Mortgage rates may rise in general next week. We may be past the worst of the sharp increases. There is always the possibility of a limited fall.
But I would be surprised if we see a drop over the course of the week. Having said that, I am not used to being surprised.
Mortgage and refinancing rates usually move in tandem. The abolition of negative market refinancing fees has largely eliminated the gap that has grown between the two.
Meanwhile, another recent regulatory change is likely to make mortgages for investment properties and vacation homes more accessible and less expensive.
How is your mortgage interest rate determined?
Mortgage and refinancing rates are generally determined by rates in the secondary market (similar to the stock or bond markets) where mortgage-backed securities are traded.
This is highly dependent on the economy. So mortgage rates tend to be high when things are going well and low when the economy is in trouble.
But you play a big role in determining your mortgage rate in five ways. You can greatly influence it by:
- Shop for your best mortgage rate – it varies greatly from lender to lender
- Boost Your Credit Score A small bump can make a big difference in your rates and payments
- SAVE THE BIGGEST DOWN PAYMENT – Lenders like you have real skin in this game
- Keep your other borrowing modest – the lower your other monthly obligations, the more mortgage you can take on
- Choose a Mortgage Carefully – Are you better off with a Conventional, FHA, Virginia, USDA, Jumbo, or other loan?
The time you spend getting these ducks in a row can see you win at lower rates.
Remember, it’s not just the mortgage rate
Be sure to factor in all of your upcoming home ownership costs when determining how much mortgage you can afford. So focus on Betty. This is your sprincipal (pays the amount you borrowed), Interest (borrowing rate), (real estate) THubs and (homeowners) INorns. Our Mortgage Calculator can help with that.
Depending on the type of mortgage and the size of the down payment, you may have to pay mortgage insurance as well. This can easily go up to three figures each month.
But there are other potential costs. So you will have to pay your Homeowners Association dues if you choose to live somewhere with the HOA. And wherever you are, you should expect repair and maintenance costs. There is no owner to call when things go wrong!
Finally, you’ll find it hard to forget about closing costs. You can see those reflected in the annual percentage rate (APR) that lenders will quote you. Because that effectively spreads it over the life of your loan, making that higher than your direct mortgage rate.
But you may be able to get help with these costs And Down payment, especially if you are a first time buyer. Read:
State Down Payment Assistance Programs for 2021
Mortgage Rate Methodology
Mortgage reports receive rates based on specific criteria from multiple lending partners every day. We came up with the average APR and APR for each loan type to display in our chart. Since we categorize a range of prices, it gives you a better idea of what you might find in the market. Moreover, we make average rates for the same types of loans. For example, FHA fixed with fixed FHA. The result is a good snapshot of daily rates and how they change over time.