Mortgage and refinance rates today, Feb. 20, and rate forecast for next week

Today’s mortgage and refinance rates 

Average mortgage rates nudged higher on Friday. It was a bad week for these rates. And they’re now hovering around the 3% mark even for the best borrowers wanting 30-year, fixed-rate mortgages (FRMs).

There’s always a possibility of sudden and sharp falls. But, right now, that seems a small one. And it’s looking more likely that we’ll see mortgage rates remain roughly where they are or edging higher this week. More below.

Apologies if you tried to access this page at its usual publication time of Saturday afternoon. A technical glitch delayed its posting.

Find and lock a low rate (Feb 21st, 2021)

Program Mortgage Rate APR* Change
Conventional 30 year fixed 2.949% 2.952% +0.02%
Conventional 15 year fixed 2.519% 2.528% +0.04%
Conventional 20 year fixed 2.887% 2.894% +0.02%
Conventional 10 year fixed 2.569% 2.593% +0.12%
30 year fixed FHA 2.69% 3.366% +0.01%
15 year fixed FHA 2.485% 3.067% +0.03%
5 year ARM FHA 2.5% 3.213% Unchanged
30 year fixed VA 2.25% 2.421% Unchanged
15 year fixed VA 2.128% 2.448% 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 (Feb 21st, 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?

If you’re still floating your rate, you’re probably worried that you’ll miss out on any falls that might turn up. And you’re right. Those could yet happen.

But the odds on those occurring to a worthwhile extent are currently looking slim. Meanwhile, the possibility of further rises seems to me larger. So I’d lock now, if I were you.

But I don’t have a crystal ball. And the decision must be wholly yours.

Still, I changed my recommendations during the week. And they’re now:

  • 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, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So be guided by your gut and your personal tolerance for risk.

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What’s moving current mortgage rates

Things have certainly moved on since last weekend’s edition. And not in a good way. But why? Well …

Rosy outlook = higher mortgage rates

In a CNN Town Hall in Milwaukee on Feb. 17, President Joe Biden said he expected that COVID-19 vaccines would be available to every American “by the end of July.” And that, along with the following, pushed mortgage rates appreciably higher:

  1. The president’s $1.9 trillion pandemic relief plan remains on track to become law
  2. COVID-19 infection, hospitalization and death rates continue to fall
  3. Concerns grew about the possibility of future inflation

It was a perfect storm for mortgage rates. And positive economic data on retail sales didn’t help.

As is usually the case when they’re in a bullish mood, investors’ focus is on positive news. But, if they shifted their perspective, they’d see plenty of reasons for concern. And if any of those materialized, mortgage rates could fall back.

Perhaps the most obvious threat to the current optimism is the possible emergence of a mutated strain of SARS-CoV-2 that is resistant to current vaccines. So far, three known variants (from the UK, South Africa and Brazil) are circulating within the US, according to the Centers for Disease Control and Prevention (CDC). And there seems little reason to think vaccines are ineffective against these. But we’re very likely to see more.

Another possible trigger for future falls in mortgage rates is a stock market collapse. We reported on Friday that there’s more chatter about such a possibility in the financial press. And the Federal Reserve announced on Feb. 12 that it wanted US banks to include a scenario in which stock prices fell 55% in their 2021 stress tests.

These are real possibilities. But nothing more than that. And you have to ask yourself how likely it is that either or both (or some completely different savior) will ride to your rescue before your closing date.

Economic reports next week

Watch out for Friday’s personal income and spending data this week. The other reports are likely to cause waves only if they’re significantly adrift from forecasts.

Here are next week’s main economic reports:

  • Monday — January leading indicators
  • Wednesday — January new home sales
  • Thursday — Weekly new claims for unemployment insurance. Plus the second reading of America’s gross domestic product (GDP) during the last quarter of 2020. Also, January advance durable goods orders
  • Friday — January personal income and personal spending

Note, too, that Federal Reserve Chair Jerome Powell is due to appear before the Senate Finance Committee and House Financial Services Committee on Tuesday and Wednesday. Fed chairs’ remarks always have the potential to move markets.

Find and lock a low rate (Feb 21st, 2021)

Mortgage interest rates forecast for next week

Well, I couldn’t have been more wrong last week when I said, “I’m not expecting mortgage rates to move far next week.” But, if you’re still interested in my predictions, I think it most likely that those rates will remain within spitting distance of the 3% mark for now for top-tier borrowers wanting 30-year FRMs.

Mortgage and refinance rates usually move in tandem. But note that refinance rates are currently a little higher than those for purchase mortgages. That gap’s likely to remain constant as they change.

How your mortgage interest rate is determined

Mortgage and refinance rates are generally determined by prices in a secondary market (similar to the stock or bond markets) where mortgage-backed securities are traded.

And that’s highly dependent on the economy. So mortgage rates tend to be high when things are going well and low when the economy’s in trouble.

Your part

But you play a big part in determining your own mortgage rate in five ways. You can affect it significantly by:

  1. Shopping around for your best mortgage rate — They vary widely from lender to lender
  2. Boosting your credit score — Even a small bump can make a big difference to your rate and payments
  3. Saving the biggest down payment you can — Lenders like you to have real skin in this game
  4. Keeping your other borrowing modest — The lower your other monthly commitments, the bigger the mortgage you can afford
  5. Choosing your mortgage carefully — Are you better off with a conventional, FHA, VA, USDA, jumbo or another loan?

Time spent getting these ducks in a row can see you winning lower rates.

Remember, it’s not just a mortgage rate

Be sure to count all your forthcoming homeownership costs when you’re working out how big a mortgage you can afford. So focus on your “PITI” That’s your Principal (pays down the amount you borrowed), Interest (the price of borrowing), (property) Taxes, and (homeowners) Insurance. Our mortgage calculator can help with these.

Depending on your type of mortgage and the size of your down payment, you may have to pay mortgage insurance, too. And that can easily run into three figures every month.

But there are other potential costs. So you’ll have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repairs and maintenance costs. There’s no landlord to call when things go wrong!

Finally, you’ll find it hard to forget closing costs. You can see those reflected in the annual percentage rate (APR) you’ll be quoted. Because that effectively spreads them out over your loan’s term, making that higher than your straight mortgage rate.

But you may be able to get help with those closing costs and your down payment, especially if you’re a first-time buyer. Read:

Down payment assistance programs in every state for 2020

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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.


Stock Market Today: Disappointing Jobs Data Dings the Dow

The shiniest object in the investing universe Thursday was a House Financial Services Committee hearing that saw politicians question several major players involved in January’s market mania surrounding GameStop and other battered stocks.

Its eventual impact, however, is questionable.

“It’s highly unlikely that hearings on Capitol Hill will result in any regulatory changes to the investing landscape, based on the events surrounding the GameStop short squeeze,” says David Trainer, CEO of investment research firm New Constructs, who called the hearing “mostly political theatre.”

Of much more substance were initial jobless claims for the week ending Feb. 13, which climbed to an unexpectedly high 861,000 from the previous week’s revised tally of 848,000.

“Initial jobless claims backed up following reduction in mobility and additional restrictions on activity in several states after the surge in new COVID-19 cases last fall, with many states introducing new measures for higher-risk activities beginning in mid-November,” say Barclays’ Michael Gapen and Pooja Sriram. “The increase in the pace of job separation appears to have peaked in the week ending January 9, when initial claims registered 927k. Initial claims thereafter moved lower, falling to 812k in the weeks ending January 23 and 30, but have now moved higher in the first two weeks of February.”

The major indices managed to finish above their intraday lows, but they all still finished in the red. The Dow Jones Industrial Average snapped a three-session win streak, closing down 0.4% to 31,480. Weighing most heavily on the industrial average was a 6.4% decline for Walmart (WMT), which reported disappointing quarterly earnings and warned that sales growth could slow in 2021.

Other action in the stock market today:

  • The S&P 500 dropped 0.4% to 3,913.
  • The Nasdaq finished off 0.7% to 13,865.
  • The small-cap Russell 2000 was worst-off, declining 1.7% to 2,218.
  • U.S. crude oil futures finally cooled off somewhat, declining 1.0% to $60.52.
  • Gold futures slipped 0.1% to $1,775.00 per ounce.
  • Bitcoin prices, at $52,266 on Wednesday, finished just 0.3% lower Thursday, to $52,101. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)

stock chart for 021821stock chart for 021821

Something ‘Special’ for Dividend Hunters

Income investing is a well-traveled and proven way to build wealth, but there’s more than one way to slice that orange.

Some investors focus on assembling a portfolio of high-quality stocks with respectable yields, like these 25 highly rated dividend payers. Some put a greater emphasis on high yield, delving into special equities such as business development companies (BDCs) and real estate investment trusts (REITs) that prioritize big payouts.

Still others believe dividend growth is key to long-term success – after all, it helps counter the purchasing power-destroying effects of inflation over time – and opt for payout-raising firms such as the Dividend Aristocrats.

Yet another strategy to explore is hunting down “serial” special dividend payers.

Special dividends are typically one-time affairs, meant to share the windfall of anomalous events such as selling off one of the company’s divisions. But a few stocks regularly incorporate these bonus payouts as part of a responsible, conservative dividend strategy – one in which they can reward shareholders during boom years without having to cut the regular payout in lean ones. Read on as we look at nine surprisingly reliable special dividends that often fly under income investors’ radar.

Kyle Woodley was long Bitcoin as of this writing.


How long should small-business, mortgage aid last?

WASHINGTON — Despite calls from the Biden administration for bipartisan action on coronavirus relief, lawmakers remain sharply divided over the scope of stimulus funds for mortgage borrowers, renters and small businesses.

At the center of the partisan disagreement is whether funding for programs like the State Small Business Credit Initiative and Homeowner Assistance Fund would be cut off when the public health emergency is declared over, or would remain in place to mitigate lingering economic effects.

“The fact is the economic crisis will last many, many months perhaps after the health crisis is over,” Rep. Brad Sherman, D-Calif., said Wednesday at a House Financial Services Committee markup of the $1.9 trillion stimulus plan championed by the White House.

Several Republicans on the panel questioned allowing funding for programs that predated the pandemic and proposed amendments to set a deadline on certain appropriations, warning that Democrats shouldn’t take advantage of the crisis to boost government programs. Yet all of their amendments were rejected.

“Bottom line, we need to deliver temporary, targeted, and COVID-related relief to the people who need it most,” McHenry said. “Despite my colleagues’ claims, it is possible to do too much. In fact, there is bipartisan agreement that this additional $1.9 trillion package could overheat the economy.”

“Millions of individuals and families are on the brink of eviction or foreclosure as back rent or mortgage payments pile up through no fault of their own,” said Chairwoman Maxine Waters, D-Calif.

“Millions of individuals and families are on the brink of eviction or foreclosure as back rent or mortgage payments pile up through no fault of their own,” said Chairwoman Maxine Waters, D-Calif.

Bloomberg News

The debate indicated that House Democrats are on track to pass the legislation with little to no GOP support. (Congress has yet to act on the stimulus plan despite a Senate vote enabling lawmakers to advance the relief package through the budget reconciliation process.)

The stimulus legislation would provide roughly $25 billion for emergency rental assistance, $5 billion to support people experiencing homelessness, $10 billion for struggling homeowners to make their mortgage payments, and $10 billion to support small businesses, including minority-owned businesses.

The $10 billion in mortgage aid would deliver relief to states and local tribes in the form of direct assistance with mortgage payments, property taxes, property insurance and other housing costs.

Democrats on the committee called for a sweeping approach to ensure that Congress is supporting the economic aftermath of the pandemic.

“Millions of individuals and families are on the brink of eviction or foreclosure as back rent or mortgage payments pile up through no fault of their own,” said Chairwoman Maxine Waters, D-Calif. “Across the nation people are struggling to make ends meet, and hunger is growing. Communities of color continue to be the hardest hit.”

Republicans on the committee warned that the legislation would authorize funds to be used well after the pandemic is over.

“If we are going to provide emergency relief, it should be provided through the national pandemic emergency, not out through 2025 and 2030,” said Rep. Ann Wagner, R-Mo.

Another sticking point is whether Congress should allocate funds for programs that were established outside of the pandemic. Democrats’ proposal includes a reauthorization of an Obama-era program to help states support small businesses, known as the State Small Business Credit Initiative.

“This would codify numerous partisan priorities, including duplicative rental assistance to funnel money toward non-COVID purposes and restarts the ineffective Obama-era State Small Business Credit Initiative,” McHenry said.

Rep. Al Green, D-Texas, said the program could leverage government funds to spur small-business growth.

“This would help our small businesses, it would help us to leverage money,” Green said. “We can have $1 billion in and it leverages $10 billion. As a matter of fact, when we had the downturn in 2008 we put in $1.5 billion into this program and it leveraged $15 billion.”

Rep. Blaine Luetkemeyer, R-Mo., attempted to amend the State Small Business Credit Initiative reauthorization, requiring all funding to be used within six months after the end of the national health emergency. But the amendment was rejected by Democrats.

“The SSBCI provision of the bill is clearly written to give states money well into the future with little immediate benefit to workers and job creators,” Leutkemeyer said. “This program is being touted as helping small businesses make it through the pandemic yet does not require all the funding to go out for five years and allows states to sit on that funding for up to 10 years.”