Mortgage and refinance rates today, September 16, 2020

Today’s mortgage and refinance rates 

Average mortgage rates soared yesterday. But the chances are yours moved much less sharply. Read on to understand this paradox. Meanwhile, conventional loans today start at 2.875% (2.875% APR) for a 30-year, fixed-rate mortgage. 

Find and lock a low rate (Sep 18th, 2020)

Current mortgage and refinance rates 

Find and lock a low rate (Sep 18th, 2020)

Last week, we slimmed down this daily article to make it easier for you to read. But we transferred much of the detail to a new stand-alone article:

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?

Yesterday’s rise in average mortgage rates for 30-year, fixed-rate mortgages was big. Mortgage News Daily reckons the rise was 15 basis points: that’s to 3.03% yesterday evening from 2.88% 24 hours earlier.

But check with your lender. Because there’s a good chance yours will have barely moved. Yesterday’s climb was almost certainly about something we warned of last week: a regulatory change to the cost of certain refinances from Fannie Mae and Freddie Mac. If your new mortgage isn’t one of those, you are likely to be largely unaffected.

There is the possibility of a more widespread change this afternoon. That’s because the Federal Reserve’s policy committee is reporting at 2 p.m. (ET), with a news conference 30 minutes later. But whether mortgage rates will move at all as a result — and how far and in which direction — will depend on what the Fed says.

Overall today, I remain comfortable with my existing locking and floating recommendations. But the decision can only be yours and must depend on your personal risk tolerance.

• LOCK if closing in 7 days
• LOCK if closing in 15 days
• FLOAT if closing in 30 days
• FLOAT if closing in 45 days
• FLOAT if closing in 60 days

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 inched down to 0.67% from 0.68%. (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 just slightly higher. (Bad 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 rose to $39.21 from $37.71. (Bad for mortgage rates* because energy prices play a large role in creating inflation and also point to future economic activity.) 
• Gold prices edged up to $1,976 an ounce from $1,975. (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 fell to 57 from 62 out of a possible 100 points. (Good 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 a matter of cents on oil ones is a fraction of 1%. So we only count meaningful differences as good or bad for mortgage rates.

Once upon a time, 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 in the mortgage market 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. Today they’re looking OK for mortgage rates. This morning’s disappointing retail sales figures blunted enthusiasm. But all might change with this afternoon’s Fed events.

Find and lock a low rate (Sep 18th, 2020)

Important notes on today’s mortgage rates

Here are some things you need to know:

1. The Fed’s ongoing interventions in the mortgage market (at least $1 trillion; some say nearly $2 trillion) should put continuing downward pressure on these rates. But it can’t work miracles all the time. So expect short-term rises as well as falls. And read “For once, the Fed DOES affect mortgage rates. Here’s why” if you want to understand that aspect of what’s happening
2. Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions
3. Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
4. Lenders vary. Yours may or may not follow the crowd when it comes to rate movements — though they all usually follow the wider trend over time
5. When rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
6. At times of high demand, lenders can push up rates as a way of managing their workflow. Neither markets nor the Fed can help when that happens

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. But check out what 10 experts think could happen between now and the end of this year:

Are mortgage and refinance rates rising or falling?

Over the last few months, the overall trend for mortgage rates has clearly been downward. A new all-time low was set early in August and another looked possible a couple of weeks ago — before better-than-expected employment data snatched that possibility away. Still, a new one remains tantalizingly close.

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.

Expert mortgage rate forecasts

And here are their current rates forecasts for the last two quarters of 2020 (Q3/20 and Q4/20) and the first two of 2021 (Q1/21 and Q2/21).

Note that Fannie’s (published yesterday) and the MBA’s are updated monthly while Freddie’s are published quarterly So Freddie’s sometimes feel stale. The numbers in the table below are for 30-year, fixed-rate mortgages:

So expectations vary considerably. You pays yer money …

Find your lowest rate today

According to federal regulator the Consumer Financial Protection Bureau, shopping around for your new mortgage or refinance is important. You could save thousands over just a few years by getting quotes from multiple lenders.

But you’ve rarely had more to gain by shopping around than you do now. The mortgage market is currently very messy. And some lenders are offering appreciably lower rates than others. Worse, some are making it harder to get any mortgage at all if you want a cash-out refinance, a loan for an investment property, a jumbo loan or if your credit score is damaged.

So comparison shopping could get you the loan you want — and save you a bundle.

Verify your new rate (Sep 18th, 2020)

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.