Mortgage and refinance rates today, September 23, 2020

Today’s mortgage and refinance rates 

Average mortgage rates inched lower yesterday, underscoring the disconnection between those and other markets. And conventional loans today start at 2.875% (2.875% APR) for a 30-year, fixed-rate mortgage. 

Current mortgage and refinance rates 

Find and lock a low rate (Sep 23rd, 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?

If you feel as if mortgage rates are stuck in Groundhog Day, you’d have a point. Nearly all movements have been tiny recently. And the only sharp ones have affected just a small minority of borrowers. The only variation is whether they go up or down by a tiny amount.

In these circumstances, complacency is understandable — but possibly unwise. Markets rarely face the level of uncertainty that confronts them now. And a single piece of news could create real volatility. Right now, that’s most likely to be pandemic-related.

If the news is good (the emergence of an effective COVID-19 vaccine, say), mortgage rates could soar over just a day or two. But if it’s bad (a clear second wave hitting the US, perhaps, as is now happening in much of Europe), those rates could plummet.

All this is a warning against assuming that the mortgage rate movements we’ve seen over the recent weeks constitute some kind of new normal.

On balance, I still think — thanks to the Federal Reserve — that we’re more likely to see rates gradually fall than rise. But that prediction comes with risks from the unknowable. And it’s almost certain that we’ll see periods (brief ones, I hope) of higher rates in coming weeks and months.

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 yesterday morning, were:

• The yield on 10-year Treasurys edged higher to 0.68% from 0.66%. (Bad 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 mixed. (Neutral 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 held steady at $39.96 a barrel. (Neutral for mortgage rates* because energy prices play a large role in creating inflation and also point to future economic activity.) 
• Gold prices dipped to $1,889 from $1,919 an ounce. (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 inched down to 55 from 56 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.

Before the pandemic and the Fed’s interventions in the mortgage market, 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 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 neutral for mortgage rates. Unless things change, markets suggest a quiet day for these rates. But the Fed has a shopping list.

Find and lock a low rate (Sep 23rd, 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 Sept. 15) and the MBA’s (out Sept. 21) are updated monthly. However, Freddie’s are published quarterly, with the last released in June and the next due any day. So Freddie’s currently 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.

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.