Today’s mortgage and refinance rates
Average mortgage rates rose appreciably yesterday. They haven’t fallen since Jan. 4 so they’re some way above the all-time low. But they’re still within the ultralow range.
I’m expecting mortgage rates to hold steady or just inch either side of the neutral line today. But a slightly bigger fall certainly isn’t out of the question. That’s based on markets being largely flat first thing. Of course, things may change.
Find and lock a low rate (Jan 20th, 2021)
Current mortgage and refinance rates
|Conventional 30 year fixed||2.688%||2.688%||-0.11%|
|Conventional 15 year fixed||2.3%||2.3%||-0.14%|
|Conventional 5 year ARM||3%||2.743%||Unchanged|
|30 year fixed FHA||2.495%||3.473%||-0.01%|
|15 year fixed FHA||2.5%||3.442%||Unchanged|
|5 year ARM FHA||2.5%||3.226%||Unchanged|
|30 year fixed VA||2.495%||2.668%||Unchanged|
|15 year fixed VA||2.25%||2.571%||+0.13%|
|5 year ARM VA||2.5%||2.406%||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 (Jan 20th, 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 hate being unable to provide strong advice over when to lock. But competing forces are currently acting on mortgage rates: one trying to push them down and the other up. And nobody knows which will win out. Read on for the details.
So mortgage rates could go either way in the coming days, weeks and months. But, for now, my personal rate lock recommendations, which are only my hunches, are:
- LOCK if closing in 7 days
- LOCK if closing in 15 days
- LOCK if closing in 30 days
- FLOAT if closing in 45 days
- FLOAT if closing in 60 days
Still, 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.
Market data affecting today’s mortgage rates
Here’s the state of play this morning at about 9:50 a.m. (ET). The data, compared with about the same time yesterday morning, were:
- The yield on 10-year Treasurys fell to 1.11% from 1.17%. (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 mostly barely moving on opening. (Neutral 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 happens when indexes are lower
- Oil prices inched up to $52.75 from $52.73 a barrel. (Neutral for mortgage rates* because energy prices play a large role in creating inflation and also point to future economic activity.)
- Gold prices nudged higher to $1,854 from $1,845 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 — Unchanged at 70 out of 100. (Neutral 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. The Fed is now a huge player and some days can overwhelm investor sentiment.
So use markets only as a rough guide. They have to be exceptionally strong (rates are likely to rise) or weak (they could fall) to rely on them. But, with that caveat, so far mortgage rates look set to have a quiet day today.
Find and lock a low rate (Jan 20th, 2021)
Important notes on today’s mortgage rates
Here are some things you need to know:
- The Fed’s ongoing interventions in the mortgage market (way over $1 trillion) should put continuing downward pressure on these rates. But it can’t work miracles all the time. And read “For once, the Fed DOES affect mortgage rates. Here’s why” if you want to understand this aspect of what’s happening
- 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 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?
I’m expecting mortgage rates to barely move today. And a modest fall is more likely than a rise.
I mentioned earlier two competing forces that are acting in conflicting ways on mortgage rates.
1. More government debt = higher mortgage rates
The first is the expectation of greater government debt. Traditionally, mortgage rates have often been tied to the yield of 10-year US Treasury bonds (“treasuries”). And the yield on those treasuries is almost certain to rise significantly as the incoming administration funds the “trillions” in stimulus spending that it promises.
So that’s the force that’s trying to push mortgage rates up. And, so far, it’s been winning. Ever since the Senate runoffs in Georgia were announced, clearing the way for that stimulus spending, mortgage rates have been rising.
2. Economic consequences of pandemic = lower mortgage rates
Then there’s the COVID-19 pandemic. According to The New York Times, new cases have soared by 37% over the 14 days ending yesterday and new deaths by 49%. And the inevitable lockdowns and other restrictions in response to this are causing serious damage to the economy.
History shows that interest rates tend to go low during harsh economic conditions and rise when the economy’s doing well. So the economic harm being wreaked by the pandemic is trying to push rates downward.
No clear winner in sight
Unfortunately, it’s much too soon to say which of these competing forces will come out on top. Over the last week or so, it’s been the anticipation of higher government debt that’s held sway. And that might continue for months to come.
But it’s equally likely that investors will return to their focus on the injured economy. Or that the conflicting forces will cancel each other out. Nobody knows. But, the moment we can call the likely outcome, we’ll let you know.
Over the last several months, the overall trend for mortgage rates has clearly been downward. And a new, weekly all-time low was set on 16 occasions last year, according to Freddie Mac.
The most recent such record occurred on Jan. 7. But that had already been overtaken by events, even before it was published. And rates are now appreciably higher.
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 each quarter of 2021 (Q1/21, Q2/21, Q3/21 and Q4/21).
However, note that Fannie’s (released on Dec. 15) and the MBA’s (Dec. 21) are updated monthly. But Freddie’s are now published quarterly. And its latest was released on Oct. 14. So that’s looking distinctly stale.
The numbers in the table below are for 30-year, fixed-rate mortgages:
But these predictions were made before the Democratic Party achieved a clean sweep of both houses of Congress and the White House. And before the pandemic became even more virulent. So they may change more this month than they normally do. And, given so many current unknowables, they may 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 (Jan 20th, 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.