Today’s mortgage and refinance rates
Average mortgage rates moved appreciably lower this week. Indeed, Mortgage News Daily called it “the best winning streak for rates in two years.”
I’m still not in a position to resume weekly rate forecasts. There’s simply too much potential for short-term volatility. But I see real grounds for new optimism over mortgage rates as I look ahead to 2023. And that’s great for those who locked when those rates were at what I hope was their peak. Because the prospect of refinancing at more affordable rates beckons.
Current mortgage and refinance rates
|Conventional 30 year fixed||6.085%||6.117%||-0.01%|
|Conventional 15 year fixed||5.521%||5.576%||+0.03%|
|Conventional 20 year fixed||5.995%||6.051%||-0.04%|
|Conventional 10 year fixed||5.659%||5.779%||Unchanged|
|30 year fixed FHA||6.044%||6.784%||-0.02%|
|15 year fixed FHA||5.636%||6.129%||+0.03%|
|30 year fixed VA||5.718%||5.945%||-0.33%|
|15 year fixed VA||5.875%||6.231%||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.|
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.
This week has changed my fundamental outlook for mortgage rates. And I’m much more positive about where they’ll go in 2023. However, there’s still plenty that could go wrong. So, I’m not quite ready to change my suggestions in the following list.
And, 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
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.
What’s moving current mortgage rates
So much could have gone wrong for mortgage rates this week. And yet nothing did. Every card fell perfectly, creating the best winning hand for years.
This time last week, I was mainly worried about two things. First, was Tuesday’s inflation report, the consumer price index (CPI) for November. But that came in better than expected, showing price rises slowing appreciably for a second consecutive month.
My second concern was Wednesday’s Federal Reserve events. Its rate hike was exactly as expected so barely touched mortgage rates. But its forecasts for future rates were as bad as I feared. Sure enough, mortgage rates started climbing on the news.
But then Fed Chair Jerome Powell stepped in to calm markets at his news conference. He basically said the forecasts shouldn’t be taken too seriously and were likely to be overtaken by events. And, within an hour, mortgage rates had changed direction, falling again.
Other economic news was also good for mortgage rates. Thursday’s retail sales figures were disappointing as were those for industrial production. And, on Friday, a couple of purchasing managers’ indexes were similarly gloomy.
Mortgage rates tend to fall when the economy’s struggling. As The Wall Street Journal (paywall) put it yesterday: “Investors who had been growing optimistic because of moderating inflation now find themselves worried about a slowdown in economic growth. Fresh services and manufacturing data on Friday added to those concerns.”
A bright outlook for 2023?
So, it looks as if we’ll be entering 2023 with plenty of hope for lower mortgage rates. However, it’s too early to count chickens.
Plenty could go wrong over the next month or so. Most obviously, a new inflation report is due out next Friday. It’s the personal consumption expenditures (PCE) price index. And it rivals the CPI in importance because it’s the one the Fed relies on more.
With luck, the PCE figures will echo those of this week’s CPI. After all, they both measure price movements. But there’s a chance they’ll be different. Meanwhile, the economy has so far proved surprisingly resilient, with employment and gross domestic product (GDP) growth holding up remarkably well. And we can’t rely on future economic data to keep driving mortgage rates down.
So, let’s not hang out the flags quite yet. Still, we can enjoy this first glimmer of light after nearly two years of gloom.
Economic reports next week
As mentioned above, the most important economic report next week could be the inflation one: the personal consumption and expenditures (PCE) price index. But a couple of others might also move mortgage rates.
The ones with the most potential impact are shown below in bold. The others could still move mortgage rates. But probably only if they reveal shockingly good or bad data.
- Monday — NAHB home builders’ index for December
- Tuesday — November building permits and housing starts
- Wednesday — November existing home sales, plus December’s consumer confidence index
- Thursday — Revised real gross domestic product growth for third quarter. Plus initial jobless claims for the week ending Dec. 17
- Friday — November’s PCE price index. Also that month’s real disposable income and real consumer spending. Plus December’s consumer sentiment index
Will Thursday and Friday deliver the ingredients for a happy holiday?
Mortgage interest rates forecast for next week
I’m much more optimistic about 2023’s mortgage rates than I was this time last week. But everything depends on economic reports continuing to drive those rates lower. And I can’t be 100% confident that they’ll do so this early in what feels like a new phase. So, I can’t make a prediction for the next seven days.
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. 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:
- Shopping around for your best mortgage rate — They vary widely from lender to lender
- Boosting your credit score — Even a small bump can make a big difference to your rate and payments
- Saving the biggest down payment you can — Lenders like you to have real skin in this game
- Keeping your other borrowing modest — The lower your other monthly commitments, the bigger the mortgage you can afford
- Choosing your mortgage carefully — Are you better off with a conventional, conforming, FHA, VA, USDA, jumbo or another loan?
Time spent getting these ducks in a row can see you winning lower rates.
Remember, they’re 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) 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. Read:
Down payment assistance programs in every state for 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 result is a good snapshot of daily rates and how they change over time.
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