Today’s mortgage and refinance rates
Average mortgage rates inched higher yesterday. So the tiny up-and-down movements continue.
This morning’s jobs report turned out better than all but the most optimistic forecasts. And yet mortgage rates today may hold steady or barely move as a result. Confused? Read on for an explanation of why markets sometimes count good news as bad news. And how they sometimes take hours or days to fully digest new data.
This daily article won’t appear on Monday because of the Independence Day public holiday. But our weekend edition will be out tomorrow. And, after that, we’ll be back next Tuesday. In the meantime, enjoy your long weekend!
Find and lock a low rate (Jul 5th, 2021)
Current mortgage and refinance rates
|Conventional 30 year fixed||2.934%||2.934%||+0.01%|
|Conventional 15 year fixed||2.25%||2.25%||Unchanged|
|Conventional 20 year fixed||2.75%||2.75%||Unchanged|
|Conventional 10 year fixed||1.955%||1.992%||+0.01%|
|30 year fixed FHA||2.711%||3.367%||+0.02%|
|15 year fixed FHA||2.556%||3.158%||+0.05%|
|5 year ARM FHA||2.5%||3.213%||Unchanged|
|30 year fixed VA||2.375%||2.547%||+0.07%|
|15 year fixed VA||2.25%||2.571%||Unchanged|
|5 year ARM VA||2.5%||2.392%||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 (Jul 5th, 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?
I’d probably lock my rate today. Because it’s currently looking likely that mortgage rates will hold steady or just edge up or down. So there’s little reward in prospect for continuing to float.
Meanwhile, rising mortgage rates look highly likely sometime soon. Unfortunately, nobody knows when.
So my personal rate lock recommendations must remain:
- LOCK if closing in 7 days
- LOCK if closing in 15 days
- LOCK if closing in 30 days
- LOCK if closing in 45 days
- LOCK 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 Treasurys inched lower to 1.45% from 1.46%. (Good for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields, though less so recently
- Major stock indexes were higher soon 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 fell back to $74.87 from $76.20 a barrel. (Good for mortgage rates*.) Energy prices play a large role in creating inflation and also point to future economic activity.
- Gold prices rose to $1,785 from $1,780 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 — increased to 46 from 44 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 hold steady or inch 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 (Jul 5th, 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. But some types of refinances are higher following a regulatory change
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
Markets around the world were trading overnight in anticipation of this morning’s official employment situation report. Only some inflation reports currently rival it for its influence on stocks and bonds, including the ones that determine mortgage rates.
And now we know what it said. But, before we get into the details, you need two caveats. First, we have a pretty good idea of how markets normally react to good or bad news. But these aren’t normal times, and in recent months they’ve not followed the usual playbook. And secondly, it sometimes takes hours or days for them to fully digest information. So sometimes a knee-jerk reaction is followed by a more considered one. There’s a risk we’re seeing that this morning.
So, to the headline numbers. Nonfarm payrolls jumped by 850,000 in June, way higher than analysts were expecting. Most consensus forecasts were around the 700,000 mark. Perhaps, surprisingly, the unemployment rate edged higher to 5.9% against an expectation of 5.6%. Earnings rose 3.6% year on year, which was much as expected.
When good news is bad news
That’s excellent news. And, for a few minutes, yields on 10-year Treasury notes (which mortgage rates often shadow) rose. But then they began to fall again before inching higher, effectively going nowhere fast. Why?
Well, as this morning’s Wall Street Journal observed, ” … for investors there’s always the worry that good news will be too good, leading the Federal Reserve to tighten policy more quickly.” Markets want the Fed to keep its foot on the stimulus gas for as long as possible. And anything that might hasten the day when it eases up is seen as a negative. So far the perceived negatives and positives in today’s report seem to be more or less canceling each other out.
Meanwhile, the Federal Reserve came under more pressure yesterday as a result of the Institute for Supply Management’s manufacturers’ price index for June. That climbed to reach its highest reading since 1979. The more worrying inflation indicators are and the longer they last, the more likely the Fed is to cave over its asset purchase program. And it’s its buying of mortgage-backed securities within that program that’s currently keeping mortgage rates artificially low.
Mortgage rates and inflation: Why are rates going up?
For more background, read Saturday’s weekend edition of this column, which has more space for in-depth analysis.
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 in April, though those moderated during the second half of that month. Meanwhile, May saw falls very slightly outweighing rises. Freddie’s July 1 report puts that weekly average at 2.98% (with 0.6 fees and points), down from the previous week’s 3.02%.
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 rates forecasts for the remaining quarters of 2021 (Q2/21, Q3/21, Q4/21) and the first quarter of 2022 (Q1/22).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on June 16 and the MBA’s on June 18. Freddie’s forecast is dated April 14. But it now updates only quarterly. So its numbers are looking stale.
However, given so many unknowables, the current crop of forecasts might be even more speculative than usual.
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 (Jul 5th, 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.
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