Mortgage rates today, September 17 and rate forecasts for next week
Today’s Mortgage and Refinance Rates
Average mortgage rates rose slightly yesterday. But, during the week, they climbed by a significant amount. And they are currently at 14-year highs.
It remains impossible to predict what will happen to mortgage rates over the coming week. Much of that will likely depend on how big the Federal Reserve’s rate hike next Wednesday is. And no one knows how big it will be, probably including the Fed.
Current mortgage and refinance rates
|Program||Mortgage rate||APR*||To change|
|30-year fixed conventional||6.322%||6.355%||+0.02%|
|15-year fixed conventional||5.556%||5.594%||-0.06%|
|20-year fixed conventional||6.584%||6.645%||+0.14%|
|10-year fixed conventional||5.573%||5.689%||+0.02%|
|30-year fixed FHA||6.394%||7.265%||Unchanged|
|15-year fixed FHA||6.059%||6.673%||+0.06%|
|30-year fixed PV||6.013%||6.24%||Unchanged|
|15-year fixed VA||6.125%||6.483%||Unchanged|
|Pricing is provided by our partner network and may not reflect the market. Your rate may be different. Click here for a personalized quote. See our rate assumptions here.|
Should you lock in a mortgage rate today?
Don’t lock in on a day when mortgage rates look set to drop. My recommendations (below) are intended to provide longer-term suggestions on the general direction of these rates. Thus, they do not change daily to reflect fleeting sentiments in volatile markets.
Some pundits think mortgage rates will drop by the end of 2021. But I’m not one of them.
So my personal rate lock recommendations remain:
- TO BLOCK if closing seven days
- TO BLOCK if closing 15 days
- TO BLOCK if closing 30 days
- TO BLOCK if closing 45 days
- TO BLOCK if closing 60 days
However, with so much uncertainty right now, your instincts could easily turn out to be as good as mine, or even better. So let your instincts and your own risk tolerance guide you.
What’s Moving Current Mortgage Rates
Last week brought a double whammy of bad news for mortgage rates. First, inflation has proven to be more persistent than markets had hoped. And, second, better-than-expected retail sales numbers for August suggest the economy is holding up pretty well.
These two elements have made it more likely that the Federal Reserve will raise rates significantly next Wednesday. There is a good chance that we will see a 75 basis point (0.75%) rise on that day. This is a very large increase by historical standards. However, this will be the third consecutive increase of this magnitude this year.
There is now little hope for a smaller increase of 50 basis points (0.5%). The FedWatch CME Tool doesn’t even register that as a possibility. And, overnight, that put the probability of a 75 basis point to 82%.
The remaining 18%? This is the probability of a huge 100 basis point (1%) rise. It wouldn’t be the biggest hike on record: it rose 200 basis points (2%) in a single day in December 1980. But it would be impossibly high by the most recent standards.
Clearly, a 75 basis point hike is much more likely. But don’t discount the possibility of a bigger one. Remember the 2016 presidential election. In a post-mortem of the result, Bench noted, “Relying heavily on public opinion polls, election forecasters put Clinton’s chance of winning at between 70% and 99%.” Hmm. Great probabilities do not always turn into reality.
Fed and mortgage rates
The Fed does not set mortgage rates. These are largely determined by the bond market in which mortgage-backed securities (MBS) are traded. When there is strong demand for these mortgage bonds, their prices rise and their yields (and mortgage rates) fall. The reverse happens when demand is low.
Incidentally, this inverse relationship between price and yield may be counter-intuitive, but it is a mathematical inevitability for all bonds.
It’s no revelation that demand for MBS has been weak this week. This is why mortgage rates have gone up. And that’s probably at least partly the result of markets pricing in what the Fed will do next Wednesday.
The Fed does not set mortgage rates. But it certainly influences them.
So the markets have been busy pricing in a 75 basis point rise this week. And, if that’s what’s announced on Wednesday, mortgage rates may only move moderately on the news. But if the one of 100 basis points is announced, expect these rates to rise sharply.
Also on Wednesday, the Fed will release its “dot plot”. This reveals where members of its monetary policy committee (the Federal Open Market Committee or FOMC) expect its main interest rate, the federal funds rate, to move in the future.
The dot chart is more than capable of significantly changing mortgage rates on its own. So don’t relax if the rate hike comes as expected. Also see what the media is saying about the dot chart.
Unfortunately, the Fed releases its announcements after each FOMC meeting at 2:00 p.m. (ET) and then holds a press conference 30 minutes later. But that’s a few hours after the release of our daily rate reports. So search the web for Fed news on Wednesday afternoon.
Economic reports next week
Most of next week’s economic reports relate to real estate. And, ironically, these rarely affect mortgage rates. There are a few others who are sometimes able to move those rates modestly. But they should contain big surprises to do so.
Next week’s big event is the Fed’s rate announcement on Wednesday. This has the potential to really shake things up.
In the following list, the main reports are in bold. Others are unlikely to move markets or mortgage rates much next week unless they contain surprisingly good or bad data.
- Monday – National Home Builders Association September Home Builders Index
- Tuesday — August building permits and housing starts
- Wednesday – Fed rate announcement and press conference. Most existing home sales in August
- Thursday — August leading economic indicators. And new weekly unemployment insurance claims through September 17.
- Friday — September purchasing manager indices for S&P’s manufacturing and service sectors. These are “flashes”, i.e. initial readings that can be reviewed later.
Watch out Wednesday!
Mortgage interest rate forecast for next week
Amid such volatility and unpredictability, seven days is too short a timeframe to make predictions about mortgage rate movements. Sorry, but I can’t even guess until Wednesday.
How your mortgage interest rate is determined
Mortgage and refinance rates are typically 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. Thus, mortgage rates tend to be high when things are going well and low when the economy is struggling. But inflation rates can undermine these trends.
But you play an important role in determining your own mortgage rate in five ways. And you can affect it significantly by:
- Shop around for your best mortgage rate – They vary widely from lender to lender
- Boost your credit score – Even a small bump 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 small — The lower your other monthly commitments, the higher the mortgage you can afford
- Choose your mortgage carefully – Are you better off with a conventional, conforming, FHA, VA, USDA, jumbo or other loan?
Time spent getting these ducks in a row can earn you lower rates.
Remember it’s not just a mortgage rate
Be sure to factor in all of your homeownership costs when calculating how much mortgage you can afford. So focus on your “PITI”. It’s your Pprincipal (repays the amount you borrowed), IInterest (the price of the loan), (the property) Jaxes, and (owners) Iinsurance. Our mortgage loan calculator can help you.
Depending on your type of mortgage and the amount of your down payment, you may also need to pay for mortgage insurance. And that can easily hit three figures every month.
But there are other potential costs. So you will 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 when things go wrong!
Finally, you will have a hard time forgetting closing costs. You can see those reflected in the annual percentage rate (APR) that lenders will quote you. Because it spreads them effectively over the term 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 every 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 APR for each loan type to display in our chart. Because we average a range of prices, it gives you a better idea of what you might find in the market. In addition, we average the rates for the same loan types. For example, fixed FHA with fixed FHA. The result is a good overview of the daily rates and their development over time.
The information contained on The Mortgage Reports website is provided for informational purposes only and does not constitute advertising for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent company or affiliates.