Mortgage and refinance rates today, September 21, 2020

Today’s mortgage and refinance rates 

Average mortgage rates edged higher last Friday. So they ended the week just a little higher than they started it. But probably not by enough to make much material difference to you. And conventional loans today start at 2.875% (2.875% APR) for a 30-year, fixed-rate mortgage. 

Find and lock a low rate (Sep 21st, 2020)

Current mortgage and refinance rates 

Find and lock a low rate (Sep 21st, 2020)

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?

Behind the scenes, mortgage lenders are recruiting and training loan officers and support staff as quickly as they can. They know they could be doing a lot more business if only they weren’t already working at full capacity.

Right now, all they can do to dampen demand is keep mortgage rates a little higher than is strictly necessary. And they can’t risk another surge in that demand by letting them go sharply lower.

Still, in the longer term, things are looking rosy for borrowers. The Federal Reserve last week renewed its promise to keep buying mortgage bonds in bulk for the foreseeable future. And its actions are the main reason rates are as low as they are.

But it’s probably unrealistic to expect sharply lower rates until the whole supply-and-demand issue is fixed. We may well get back to August’s all-time low — and perhaps slightly lower — sometime in coming weeks. But there’s a constant risk of wider markets putting a brake on that, and pushing them modestly higher than they are now.

In my personal view, there’s more likely to be downward movement than upward over the coming weeks. But it’s almost inevitable that there will be some periods when rates move higher. And that’s why my personal recommendations are:

• 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 last Friday morning, were:

• The yield on 10-year Treasurys nudged down to 0.66% 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 sharply lower. (Good 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 fell to $39.95 from $41.16. (Good for mortgage rates* because energy prices play a large role in creating inflation and also point to future economic activity.) 
• Gold prices dropped to $1,919 an ounce from $1,956. (Bad 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 tumbled to 54 from 59 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 better for mortgage rates. Investors are eyeing with alarm the second COVID-19 wave that’s crashing over Western Europe. Will it come here next?

Find and lock a low rate (Sep 21st, 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 this 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. Read How mortgage rates are determined and why you should care
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 we’ve gotten close to others since. Still, a new one remains a real possibility.

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 last Tuesday) 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

Everyone — from federal regulators to personal finance gurus — agrees that 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. And more, if you keep your mortgage for a long time or have a large loan.

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 start shopping around soon for your new mortgage or refinance. You’re most likely to find a great deal on the type of loan you want if you spread your net widely.

Verify your new rate (Sep 21st, 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.