Average mortgage rates barely moved yesterday. Unfortunately, however, they rose appreciably over the last seven days.
Last week, I managed a rare (and correct) forecast of where mortgage rates would head this week. But that's something I can't repeat today. And we're back to those rates being wholly unpredictable over that period.
|Conventional 30 year fixed||7.409%||7.44%||-0.07%|
|Conventional 15 year fixed||6.63%||6.66%||-0.07%|
|Conventional 20 year fixed||7.356%||7.409%||-0.05%|
|Conventional 10 year fixed||6.618%||6.697%||-0.01%|
|30 year fixed FHA||7.001%||7.709%||-0.26%|
|15 year fixed FHA||6.714%||7.286%||-0.1%|
|30 year fixed VA||6.888%||7.127%||-0.05%|
|15 year fixed VA||6.606%||6.97%||-0.02%|
|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.|
Don't lock on a day when mortgage rates look set to fall. My recommendations (below) are intended to give longer-term suggestions about the overall direction of those rates. So, they don't change daily to reflect fleeting sentiments in volatile markets.
The Federal Reserve's report and comments on Wednesday only reinforced my view that mortgage rates are unlikely to fall far (at least for long) for several months.
So, my personal rate lock recommendations remain:
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.
Unfortunately, last week's Federal Reserve activity panned out pretty much as I predicted. The central bank remains committed to doing what it takes to tame inflation. And that includes hiking interest rates.
When the Fed raises the federal fund rate, almost all interest rates rise in line with it. There's a direct tie.
Now, it's true that mortgage rates are different. They're not directly tied to any other rate. Instead, they're largely determined by the yield on a type of bond (the mortgage-backed security or MBS) traded on a specialist bond market.
However, the Fed has a huge influence on that market. And we've seen mortgage rates rise this year as Fed rate hikes have been implemented.
With Wednesday's Fed activities out the way, what's next? Well, there's a repeat due on Dec. 14. And markets are already focusing on that.
CME's FedWatch tool puts the probability of a 50-basis-point (0.5%) hike that day at 52% and of another 0.75% increase at 48%. But those will change as the weeks pass.
In the meantime, of course, data in economic reports will move mortgage rates. But reactions to those reports will at least in part be driven by a single question: What impact will these data have on the Fed's next rate hike?
The reports that are most likely to influence mortgage rates over the coming weeks are those for:
Higher unemployment and lower growth and inflation are likely to be good for mortgage rates. But the opposites of those would probably be bad news for those rates. That would typically be true at all times, but, currently, their influence on the Fed could magnify their effect.
The first of those comes next Thursday in the shape of the CPI report for October. And at least one of each are scheduled before those Dec. 14 Fed events.
All this leaves me pessimistic about mortgage rates over the next few months. In its communications on Wednesday, the Fed noted that "recent data indicate modest economic growth, a very tight labor market, and elevated inflation," to quote a Comerica Bank e-newsletter yesterday.
Of course, there's always hope that future figures will become more friendly to mortgage rates. But I fear it would take an exceptionally sharp turn to divert the Fed from its rate-hiking path before next spring. And yesterday's employment situation report suggests good news is unlikely anytime soon.
Next week, it's all about Thursday's consumer price index. There's really very little else to worry about. Oh, and markets are closed on Friday for the Veterans Day holiday.
That important report is shown below in bold. Others are unlikely to move mortgage rates unless they contain shockingly good or bad data.
Thursday's the big day next week.
Unfortunately, I have to revert to my recent default position and fail to provide a forecast for where mortgage rates will move next week. Things are simply too volatile and unpredictable to make a judgment.
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. But inflation rates can undermine those tendencies.
But you play a big part in determining your own mortgage rate in five ways. And you can affect it significantly by:
Time spent getting these ducks in a row can see you winning lower rates.
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) that lenders will quote you. 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.