Today’s mortgage and refinancing rates
Average mortgage rates rose again yesterday. It’s been a terrible start to 2022 for those who haven’t set their prices yet. Every day there were gains, some of them large.
Unfortunately I suspect Mortgage rates could rise further next week. There aren’t many glimmers of hope. But after such sharp climbs, short periods of decline are common.
So if one of these hits next week, I could be proven otherwise. But I would be surprised if these courses regain something like the ground they lost. Unless there is unexpectedly bad scientific news about the Omicron variant of COVID-19, which suggests its harmful effects are likely to last longer than currently expected.
Find and lock a low tariff (January 8, 2022)
Current mortgage and refinancing rates
|program||Mortgage rates||Effective interest rate*||change|
|Conventional 30 years||3,649%||3,671%||+ 0.08%|
|Conventionally fixed for 15 years||2,912%||2,949%||+ 0.06%|
|Conventional 20 years old||3,483%||3.52%||+ 0.1%|
|Conventionally fixed for 10 years||2,907%||2,978%||+ 0.08%|
|30 years permanent FHA||3,678%||4,431%||+ 0.05%|
|Fixed FTA for 15 years||2,887%||3,537%||+ 0.13%|
|5/1 ARM FHA||2,815%||3,417%||+ 0.05%|
|30 years of permanent VA||3,433%||3,628%||+ 0.13%|
|15 years fixed VA||3.191%||3,538%||+ 0.09%|
|5/1 ARM-VA||2,753%||2,681%||+ 0.04%|
|Prices are provided by our partner network and may not reflect the market. Your price can be different. Click here for an individual price offer. View our rate assumptions here.|
Find and lock a low tariff (January 8, 2022)
Should You Lock A Mortgage Rate Today?
The last time I wrote this weekend edition of our daily rate report, it was before Christmas. And most were afraid of the health and economic damage that Omicron could cause.
I wrote at the time, “… the first signs are bad. And that will likely keep mortgage rates low, at least until we have more reliable data.” Well, we have more reliable data.
And that gives cause for real optimism, not in the short term, of course, but for spring and beyond. Read on for more details.
That changed everything. And my personal rate lock recommendations are:
- LOCK when close in 7th Days
- LOCK when close in fifteen Days
- LOCK when close in 30th Days
- LOCK when close in 45 Days
- LOCK when close in 60 Days
With so much uncertainty right now, however, your instincts could easily prove as good as mine – or better. So let your gut instinct and your personal risk tolerance guide you.
What is moving the current mortgage rates
The Omicron variant is likely to bring you a world of pain for many weeks. While it usually causes mild or no symptoms in most people, the sheer number of new cases each day inevitably results in a high need for hospital admissions and ICU beds. And that can overwhelm medical resources at some hotspots. Worse still, the number of deaths will rise.
All of this has already done great economic damage, and there is no doubt more to come. So why are the markets behaving like Omicron and COVID-19 are gone?
Well, because investors always claim they are looking (and trading) at least months in advance. And most buy into an optimistic – albeit believable – scenario of how things could be in a few months.
Normal again by spring?
They believe that with its sky-high portability, Omicron could blow through the population quickly and peak within a couple of weeks or so. By the time it returns to normal levels, a large proportion of Americans (and foreigners) will be infected and thus have high immunity to all existing variants of COVID-19 – and maybe future ones too. In other words, we would have achieved it Herd immunity.
In that case, COVID-19 would go from a pandemic to an endemic disease pretty soon, similar to seasonal flu. This is what happened to the Spanish flu a century ago. And we and the economy could go back to something normal, maybe until spring comes.
Well, all of this is far from certain. And some public health researchers and virus experts aren’t ready to take on the scenario just yet. But many are, at least as a strong possibility.
Rising Mortgage Rates?
And the markets seem to be. This is the main reason mortgage rates have been rising consistently for more than a week.
The spotlight is now back on the three main forces driving mortgage rates up, but overshadowed by Omicron. Those are:
- Uncomfortably high inflation rates
- The dismantling of their stimulus programs from the pandemic era by the Federal Reserve
- A sustained, strong economic recovery (admittedly, with hiccups)
Of course, sometimes mortgage rates go lower. Such ups and downs are a constant feature of the markets.
But if events don’t overtake this optimistic scenario about Omicron, I expect these rates will continue to rise overall.
Economic reports next week
Some important economic reports will be released next week. Wednesday’s consumer price index will provide further insight into December inflation. And Friday’s retail sales data will provide clues as to how the economic recovery has played out this month at the consumer level.
The week’s key reports below are in bold.
But none of the other economic reports listed below are likely to cause much movement in the markets unless it includes shockingly good or bad data:
- Wednesday – December Consumer price index (CPI) and core CPI (CPI excluding volatile food and fuel prices)
- Thursday – December Producer price index – another measure of inflation. Plus weekly new claims for unemployment insurance until January 8th
- Friday – December Retail sales. And the Import price index, and industrial production and capacity utilization, all for this month as well. In addition, the first reading of January Consumer sentiment index
Chances are, Wednesday and Friday will be the days to watch.
Show me today’s prices (Jan 8, 2022)
Mortgage rates forecast for next week
Mortgage rates could rise overall next week. However, some falls can occur simply because they often occur after sustained climbs.
And it is entirely possible that these outweigh the climbs. But I’d be surprised if they did, unless either these major economic reports contain very bad news or we learn worrying new things about Omicron.
Mortgage and refinancing rates usually move in parallel. And the elimination of the disadvantageous market refinancing fee has largely closed a gap that had grown between the two.
Meanwhile, another regulatory change recently has likely made investment property and vacation rental mortgages more accessible and less expensive.
This is how your mortgage rate is determined
Mortgage and refinance rates are generally determined by prices on a secondary market (similar to the stock or bond markets) that trade mortgage-backed securities.
And that depends heavily on the economy. So mortgage rates are typically high when things are going well and low when the economy is in trouble.
But you play a huge role in determining your own mortgage rate in five ways. And you can significantly affect it by:
- Find your best mortgage rate – they vary widely from lender to lender
- Boost Your Credit Score – Even a small increase can make a big difference to your rate and payments
- Save the Biggest Down Payment possible – lenders like you to have real skin in this game
- Keep Your Other Borrowings Modest – The lower your other monthly obligations, the higher the mortgage you can afford
- Choose Your Mortgage Carefully – Are You Better Off With A Conventional, FHA, VA, USDA, Jumbo, Or Any Other Loan?
The time you spend getting these ducks in a row can result in you winning lower prizes.
Remember, this is not just a mortgage rate
Make sure to count all the upcoming home costs when figuring out how much a mortgage you can afford. So concentrate on your “PITI”. This is yours P.rincipal (pays back the amount borrowed), IInterest (the price of borrowing), (property) TAxles and (homeowners) IInsurance. Our mortgage calculator will help you with this.
Depending on your mortgage type and the amount of your down payment, you may also need to pay for mortgage insurance. And that can easily reach three digits every month.
But there are other potential costs as well. So you have to pay community contributions if you choose to live with an HOA. And wherever you live, you have to expect repair and maintenance costs. There’s no landlord to call if something goes wrong!
After all, it’s hard to forget about closing costs. You can see this in the annual percentage rate (APR) that the lenders give you. Because this effectively spreads them over the term of your loan so that it is higher than your pure mortgage interest.
But you may be able to get help with these closing costs and Your deposit, especially if you are a first-time buyer. Read:
Down payment assistance programs in each state for 2021
Mortgage rate methodology
The mortgage report receives interest rates from several credit partners on a daily basis according to selected criteria. We’ll find an average interest rate and an APR for each type of loan shown on our chart. By averaging a number of prices, this will give you a better idea of what you might find in the market. In addition, we determine average interest rates for the same types of credit. Example: FHA fixed with FHA fixed. The result is a good snapshot of the daily rates and how they change over time.
The information contained on The Mortgage Reports website is for informational purposes only and is not intended to be an advertisement for the products offered by Full Beaker. The views and opinions expressed here are those of the author and do not reflect the policies or position of Full Beaker, its officers, parents or affiliates.