Mortgage And Refinance Rates, Dec. 21

Today’s mortgage and refinance rates

Average mortgage rates rose appreciably yesterday. And the cumulative increases over the last three business days have all but wiped out last week’s falls.

Flying drone with camera

So, we’re due better news. And, so far this morning, it’s looking as if mortgage rates today might fall. But, as always, that could change as the hours pass.

Current mortgage and refinance rates

Program Mortgage Rate APR* Change
Conventional 30 year fixed 6.416% 6.451% +0.14%
Conventional 15 year fixed 5.736% 5.786% +0.07%
Conventional 20 year fixed 6.212% 6.269% +0.07%
Conventional 10 year fixed 5.929% 6.05% +0.06%
30 year fixed FHA 6.307% 7.054% +0.14%
15 year fixed FHA 5.882% 6.378% +0.06%
30 year fixed VA 5.82% 6.048% -0.16%
15 year fixed VA 6.25% 6.61% +0.06%
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.

Should you lock a mortgage rate today?

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.

I was viewing the future for mortgage rates with sunny optimism as recently as this past weekend. But now I’m very unsure what to expect next.

So, for now, my personal rate lock recommendations 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

>Related: 7 Tips to get the best refinance rate

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 Treasury notes fell to 3.65% from 3.70%. (Good for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
  • Major stock indexes were mostly higher soon after opening. (Sometimes bad for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
  • Oil prices increased to $77.89 from $75.55 a barrel. (Bad for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
  • Gold prices nudged up to $1,828 from $1,818 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold rises and worse when gold falls. Gold tends to rise when investors worry about the economy.
  • CNN Business Fear & Greed index — climbed to 42 from 37 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 movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. 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, mortgage rates today look likely to fall. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.

Important notes on today’s mortgage rates

Here are some things you need to know:

  1. 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
  2. Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
  3. Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
  4. When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
  5. Refinance rates are typically close to those for purchases.

A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.

Are mortgage and refinance rates rising or falling?

Some think yesterday’s rise in mortgage rates was down to the Bank of Japan (that country’s equivalent of our Federal Reserve) allowing one of its interest rates to float. Well, that and the magnifying impact of the “holiday effect,” which tends to create extra volatility during the festive season.

That may be true. But I suspect that there’s more going on here.

Early last week, I feared that the Fed’s forecasts of future interest rates (the so-called dot plots) would push mortgage rates higher. And they began to do so until Fed Chair Jerome Powell suggested everyone should take them with a pinch of salt. That’s why mortgage rates fell last week. Well, that and last Tuesday’s inflation report, which showed price rises continuing to slow.

At the time, I was surprised and delighted that investors bought Mr. Powell’s line so easily. But now I fear investors are having second thoughts. Yesterday, I quoted from Sunday’s Wall Street Journal (U.S. Treasurys and mortgage rates typically have a close relationship):

“Many investors and bond analysts remain far from convinced that the pain is over for Treasurys. They argue that a still-tight labor market could keep inflation elevated and force the Fed to raise rates higher than the market currently expects, even if economic growth does turn negative over the next 12 months.”

True, the Journal’s article went on to say this is still a minority belief. But, were it to be shared more widely, that could be bad news for mortgage rates.

How likely is it that what’s now a minority view will be adopted by the majority of bond investors? Honestly, I don’t know. But there’s clearly a danger that mortgage rates will continue to move higher.

For more background, please read the latest weekend edition of this report.

According to Freddie Mac’s archives, the weekly all-time low for mortgage rates was set on Jan. 7, 2021, when it stood at 2.65% for conventional, 30-year, fixed-rate mortgages.

Freddie’s Dec. 15 report put that same weekly average at 6.31%, very slightly down from the previous week’s 6.33%.

Recently, Freddie stopped including discount points in its forecasts. It has also moved later in the day the time at which it publishes its Thursday reports. And, from now on, we’ll be updating this section on Fridays.

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 rate forecasts for the current quarter (Q4/22) and the first three quarters of next year (Q1/23, Q2/23 and Q3/24).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s and the MBA’s forecasts appeared on Dec. 19 and Freddie’s on Oct. 21. Freddie now publishes its forecasts quarterly and its figures can quickly become stale.

Forecaster Q4/22 Q1/23 Q2/23 Q3/23
Fannie Mae 6.7% 6.5%  6.4% 6.2%
Freddie Mac 6.8% 6.6%  6.5% 6.4%
MBA 6.6% 6.2%  5.6% 5.4%

Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.

Find your lowest rate today

You should comparison shop 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.”

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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See also  Lennar Tops Q1 Results, Led by Strong Housing Demand

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