Mortgage rates today, July 3 and rate forecasts for next week
Today’s Mortgage and Refinance Rates
Average mortgage rates edged down yesterday. Because the markets ignored the Better Than Expected Jobs Report that day. More on that below.
Again i guess mortgage rates could barely budge this week. There are no economic reports that make the headlines on the calendar. And, at the moment, there is nothing obvious that I can see that is likely to push them far either way.
Find and Lock in a Low Rate (Jul 3, 2021)
Current mortgage and refinancing rates
|Conventional 30 years fixed||2.929%||2.929%||-0.01%|
|Conventional 15 years fixed||2.25%||2.25%||Unchanged|
|Conventional 20 years fixed||2.63%||2.63%||-0.12%|
|Conventional 10 years fixed||1.95%||1,978%||-0.01%|
|30-year fixed FHA||2,695%||3.351%||-0.02%|
|15 years fixed FHA||2,369%||2,968%||-0.19%|
|5/1 ARM FHA||2.5%||3.213%||Unchanged|
|Fixed VA over 30 years||2,343%||2,515%||-0.03%|
|VA fixed 15 years||2.25%||2,571%||Unchanged|
|5/1 ARM VA||2.5%||2,392%||Unchanged|
|Prices are provided by our network of partners and may not reflect the market. Your rate may be different. Click here for a personalized quote. See our pricing assumptions here.|
Find and Lock in a Low Rate (Jul 3, 2021)
COVID-19 Mortgage Updates: Mortgage lenders change rates and rules due to COVID-19. To see the latest information on the impact of the coronavirus on your home loan, click here.
Should you lock in a mortgage rate today?
The past week has been good for mortgage rates. But they were only down 4 basis points over five business days, according to data from Mortgage News Daily. And a basis point is only one hundredth of 1%. There is no risk that those who still float their rates will get fat on the lower monthly payments or the closing costs that these sorts of drops entail.
But there is a risk that they will be caught in a sharp rise in mortgage rates, which is a real possibility. Even without the big increase, Fannie Mae expects these rates to average 3.2% for a 30-year fixed rate mortgage in the first quarter of 2022. Freddie Mac expects 3.5%. And the Mortgage Bankers Association estimates it will be 3.7%. Whatever your opinion, most experts think mortgage rates will go up.
And, in my opinion, the risks of floating outweigh the possible rewards. So my personal recommendations remain:
- LOCK if the closure 7 days
- LOCK if the closure 15 days
- LOCK if the closure 30 days
- LOCK if the closure 45 days
- LOCK if the closure 60 days
However, with so much uncertainty right now, your instincts could easily turn out to be as good as mine, if not better. So let your instincts and your personal risk tolerance guide you.
What changes current mortgage rates
There was a good essay in The New York Times yesterday by Julia Coronado, who was an economist on the Federal Reserve Board of Governors and is now a professor at the University of Texas at Austin. She explored the new kind of economic recovery we are seeing now, which relies on more generous support for American individuals and businesses. And she thanked the Trump and Biden administrations for adopting such policies.
Incidentally, she also explained why yesterday’s excellent employment situation report didn’t set off fireworks in the markets:
More conventional policy advisers who are very clearly concerned about inflation on TV may be correct that we will see more persistent inflationary pressures, but markets are generally voting with the Fed’s assessment that the heat from that moment will be largely transitory. Interest rates are still low, with little indication that the creditworthiness of the United States is in question.
– NYT, “Here’s why this economic recovery shames 2009“(Paywall), July 2, 2021
In other words, enough investors are just giving the lead to the Fed for now. And they think the central bank will carry out its current policies.
Not out of the woods
This has been true for months now for bond markets in general – and whoever sets mortgage rates in particular. This is why there has been only occasional and limited volatility in these rates.
But commerce based on faith in an institution is inherently fragile. And it might take something small enough to completely change the mood: a drop of water that breaks the camel’s back.
To mix up the metaphors, what if the little Dutchman took his finger off the Fed’s levee? We cannot be sure. But we could well see the Fed forced to slow down and then halt asset purchases that are currently keeping mortgage rates artificially low.
Meanwhile, as long as investors maintain their confidence in the Fed, mortgage rates look likely to drift. Some weeks are bound to be good. But most experts expect the overall direction of travel to be (slightly) higher.
It was possible that yesterday’s employment report prompted the Dutch child to get his number back. And future jobs and inflation reports still have the potential to do so.
But this is only valid as long as the economic recovery continues. At the moment, it seems safe. And the Fed is forecasting growth in 2021 of 7%, the highest rate since the early 1980s.
However, the future is never certain. And something could happen that strangles that recovery. For example, some fear the possible emergence of a vaccine-resistant variant of SARS-CoV-2, the virus that causes COVID-19. If this or some other life-changing event were to occur, mortgage rates could well fall.
But deciding when to float or lock in your mortgage rate is to weigh the odds. And, to me, it seems unwise to bet the amount of your future monthly payments on such unlikely scenarios.
Economic reports next week
The event in next week’s calendar most likely to influence mortgage rates isn’t an economic report at all. This is Wednesday’s release of the minutes of the last meeting of the Federal Open Market Committee (FOMC). It is the main political body of the Federal Reserve.
Investors and analysts are still looking at these minutes. But they will be particularly interested in the latter as they will reveal discussions about future interest rate hikes and decreasing asset purchases. They’re recording the tempers of every senior Fed official on this crucial topic.
None of the actual economic reports listed below are likely to cause much movement in the markets unless they include shocking data, good or bad. Plus, regular readers will know that investors have ignored most economic reports in recent months. Thus, the effects of the following may be different from normal:
- Tuesday – June Index of services from the Institute for Supply Management (ISM)
- Wednesday – FOMC update and job postings in June
- Thursday – New weekly unemployment insurance claims until July 10
Next week, Wednesday is the big day with his FOMC minutes.
Find and Lock in a Low Rate (Jul 3, 2021)
Mortgage interest rate forecasts for next week
Again, I expect that mortgage rates could remain stable or almost stable next week.
Mortgage and refinance rates generally move in tandem. But be aware that refinancing rates are currently a little higher than those for purchase mortgages. This spread is likely to remain fairly constant as they change.
Meanwhile, a recent regulatory change has made most mortgages for investment property and vacation homes more expensive.
How your mortgage interest rate is determined
Mortgage and refinance rates are generally determined by prices in a secondary market (similar to stock or bond markets) where mortgage-backed securities are traded.
And it depends heavily on the economy. So mortgage rates tend to be high when things are going well and low when the economy is struggling.
But you play an important role in determining your own mortgage rate in five ways. You can significantly affect it by:
- Find Your Best Mortgage Rate – Lender to Lender Vary
- Increase Your Credit Score – Even a Small Bump Can Make a Big Difference in Your Rate and Payments
- Save the Biggest Down Payment Possible – Lenders love you to have real skin in this game
- Keep your other loans small – The lower your other monthly commitments, the larger the mortgage you can afford
- Choosing Your Mortgage Carefully – Are You Better With A Conventional, FHA, VA, USDA, Jumbo Or Other Loan?
Time spent lining up these ducks can earn you lower rates.
Remember, it’s not just a mortgage rate
Be sure to count all of your upcoming homeownership costs when determining how much mortgage you can afford. So focus on your “PITI” This is your Pmain (reimburses the amount you borrowed), Iinterest (the loan price), (property) Taxes, and (owners) Iinsurance. Our mortgage calculator can help.
Depending on your mortgage type and the amount of your down payment, you may also need to pay for mortgage default insurance. And that can easily reach three digits each month.
But there are other potential costs. You will therefore have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repair and maintenance costs. There is no owner to call in case of a problem!
Finally, you will have a hard time forgetting the closing costs. You can see which are reflected in the Annual Percentage Rate (APR) that will be shown to you. Because it effectively spreads them out over the life of your loan, making it higher than your normal mortgage rate.
But you may be able to get help with those closing costs. and your down payment, especially if you are a first-time buyer. Lily:
Down payment assistance programs in each state for 2021
Mortgage rate methodology
Mortgage Reports receive daily rates based on selected criteria from multiple lending partners. We arrive at an average rate and an APR for each type of loan to display in our graph. Because we average a range of rates, it gives you a better idea of what you might find in the market. In addition, we average the rates for the same types of loans. For example, fixed FHA with fixed FHA. The end result is a good overview of the daily rates and how they have changed over time.