Today’s mortgage rates
Average mortgage rates soared yesterday. Indeed, they rose so fast that they ruined what was promising to be a great week. And Thursday evening’s promise of significant falls over the last seven days turned into an appreciable rise.
There’s a reasonable chance of mortgage rates falling next week. I’m basing that mostly on the possibility of a bounce down early in the week in response to Friday’s huge rise followed by a succession of mostly rate-friendly speeches by top Federal Reserve officials. But both those are far from inevitable.
Current mortgage and refinance rates
|Conventional 30-year fixed
|Conventional 15-year fixed
|Conventional 20-year fixed
|Conventional 10-year fixed
|30-year fixed FHA
|30-year fixed VA
|5/1 ARM Conventional
|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 See our rate assumptions here.
Should you lock a mortgage rate today?
Oh, dear. On Thursday, I really hoped that markets were teeing up to deliver a sustained downward trend for mortgage rates. I was even planning to change my rate lock recommendations (below).
Then Friday’s jobs report ruined everything, sending mortgage rates soaring and wiping out all their recent gains. You now have to go back to Jan. 24 to find higher mortgage rates than today’s.
I still think that gently falling mortgage rates will probably be a feature of 2024, barring major upsets. But not yet.
So, my personal rate lock recommendations remain:
- LOCK if closing in 7 days
- LOCK if closing in 15 days
- LOCK if closing in 30 days
- FLOAT if closing in 45 days
- FLOAT 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
It was shaping up to be such a good week for mortgage rates. And then everything went wrong yesterday.
Regular readers know that mortgage rates tend to rise on good economic news and fall on bad. And yesterday’s jobs report was very good indeed.
The headline figure told the wider story. Markets were expecting 185,000 new jobs to have been created in January. In fact, 353,000 were.
Investors tend to trade ahead of reports’ publications based on these expectations, which are called analysts’ consensus forecasts. When forecasts are so dramatically wrong, many on Wall Street are left exposed, finding themselves positioned in markets inappropriately. Yesterday, we saw the undignified scramble to reposition themselves play out in sharply higher mortgage rates.
We’re left with a glimmer of hope. Sometimes, markets overreact in such panicked scrambles, moving further than was justified by the news. Then, after a pause for breath, there’s another, more measured movement in the opposite direction as investors correct their positions again.
I shouldn’t be surprised if we were to see one of those early next week, resulting in mortgage rates regaining some of the ground they lost yesterday. But don’t bank on it.
One result of yesterday’s uber-strong jobs report is that many fewer investors now expect the Federal Reserve to cut general interest rates in March. Most now think May 1 or June 20 more likely dates for an initial cut.
That’s probably realistic. Even though inflation measured over the last six months is now back below the Fed’s 2% target, the central bank remains worried about the economy overheating, sending prices higher again. And yesterday’s jobs report added to that fear. So, it will likely be cautious.
This week brings a dozen speeches by senior Fed officials, many of which will provide a commentary on future policy on general interest rates. If enough of those speak warmly about the likelihood of an initial rate cut in May, that could help mortgage rates to fall. Will they? We’ll just have to wait and see.
Next week’s economic reports
After so many major economic reports over the last couple of weeks, we’re due a bit of a break. And next week brings one.
The next blockbuster report is the consumer price index (CPI). And that’s not due until Feb. 13, the week after.
Of course, there are still a few reports next week. But most rarely trouble mortgage rates at all. And those that do tend to create only small and temporary movements.
There are two on Monday that could generate such movements. They are a couple of January purchasing managers’ indexes (PMIs) for the services sector. Markets are expecting them to show mild improvements, which sounds realistic to me. So, with luck, they’ll largely pass unnoticed by us.
The only other report that is likely to affect mortgage rates noticeably lands on Friday morning. And it provides annual CPI seasonal factor revisions. The Bureau of Labor Statistics explains, “Each year with the release of the January CPI, seasonal adjustment factors are recalculated to reflect price movements from the just-completed calendar year.”
In most years, these revisions pass unnoticed because inflation isn’t a problem. But this year it’s top of markets’ agenda. So, I guess Friday could be significant if it messes with our current understanding of where inflation stands.
Economic reports next week
See above for details about the more important economic reports next week.
In the following list of next week’s reports, only those in bold typically have the potential to affect mortgage rates appreciably. The others probably won’t have much impact unless they contain shockingly good or bad data.
- Monday — January PMIs for the services sector from S&P and the Institute for Supply Management
- Tuesday — Nothing
- Wednesday — December trade deficit and January consumer credit. Plus Congressional Budget Office briefing on budget and economic outlook
- Thursday — December wholesale inventories. And initial jobless claims for the week ending Feb. 3
- Friday — CPI seasonal factor revisions
Let’s hope for a quietly good week.
Mortgage rates forecast for next week
I’m hoping mortgage rates might fall next week. But that’s reliant on a correction after Friday’s sharp rise and rate-friendly speeches from senior Fed officials. And neither of those is guaranteed.
How your mortgage interest rate is determined
A bond market generally determines mortgage and refinance rates. It’s the one where trading in mortgage-backed securities takes place.
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 something called you “PITI.” That stands for:
- Principal — Pays down the amount you borrowed
- Interest — The price of borrowing
- Taxes — Specifically property taxes
- Insurance — Specifically 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 rate 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:
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.