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Mortgage markets improved last week for the second straight week, pushing mortgage rates lower once again. Refinance applications climbed as low rates made HARP 2, FHA and VA Streamline Refinances, and jumbo mortgage refis possible.
Mortgage rates are on a downward trend and may continue to fall through the New Year. So, should you ride the wave lower, or lock something in now? The answer depends on your perspective.
Skip to today's live mortgage rates.
Freddie Mac : 30-Year Fixed Drops Again
According to Freddie Mac's weekly survey of 125 banks nationwide, mortgage rates for a 30-year fixed rate conventional loan fell 0.18 percentage points last week, falling to 4.32%, on average.
To lock the rate requires 0.7 discount points to be paid at closing where 0.7 discount points is a one-time cost equal to 0.7% of your mortgage loan size. This adds $700 in closing cost per $100,000 borrowed.
Discount points are sometimes tax-deductible. They're also optional and not all households will want to pay them. For loans without discount points, mortgage rates are higher.
A zero-point conventional mortgage is nearer to 4.750%.
Rates are also affected by your individual loan traits. Mortgages for a 2-unit home, for example, may be subject to mortgage rate adjustments of up to 0.25 percentage points; as may loans for second homes and investment properties.
Freddie Mac's survey is a "general" rate. Your actual quoted rate may vary.
Note, though, that rates for all loans and loan types have been falling :
- Conventional mortgage rates are at a 10-week low
- FHA mortgage rates are at a 12-week low
- VA mortgage rates are a 12-week low
With mortgage rates down, homeowners who missed a prior opportunity to refinance have a second chance to save. The typical refinancing household is saving more than 1 percentage point off their rate.
Click here to compare today's mortgage rates.
Week Ahead : Lock Now, Or Hope For Lower Rates?
When mortgage rates drop quickly, the question is often asked : "Should I lock today's mortgage rate, or wait for rates to fall?" It's a difficult question to answer. Nobody can predict the future.
However, this week, the future is a little more clouded than usual. In addition to the potential U.S. government shutdown and the possibility of crossing the debt ceiling, the September Non-Farm Payrolls report gets released this Friday.
The jobs report is a major Wall Street focus. Its release will move markets -- maybe for the worse.
This week's complete calendar is sparse :
- Monday : None
- Tuesday : None
- Wednesday : Fed Chairman Ben Bernanke speaks
- Thursday : Initial Jobless Claims
- Friday : Non-Farm Payrolls
Note that mortgage rates will become increasingly erratic as the week progresses, which is the effect of Friday's jobs report on the Federal Reserve's QE3 program.
For now, QE3 is what's keeping rate down. The program is an economic stimulus. Via QE3, the Fed suppresses U.S. mortgage rates by purchasing mortgage-backed securities on the open market which, in turn, spurs the housing market and construction jobs, and increases household spending via refinancing.
Currently, the Fed makes $40 billion in such purchases each month.
The Federal Reserve is ready to reduce QE3's size, it says, but only after it believes the economy can withstand such a "taper". Not surprisingly, the labor market is among the first places the Fed looks for proof of economic strength and it's why Friday's jobs report will move mortgage rates this week.
If the actual number of jobs created in September exceeds analyst expectations and shows strength, mortgage rates are expected to rise -- maybe by a lot. Conversely, if the jobs market appears to be weak or slowing, mortgage rates are expected to drop.
It will be increasingly risky to float mortgage rates this week. Rates may drop, but what if they don't?
Compare Today's Live Mortgage Rates
For today's U.S. home buyers and active rate shoppers, the last few weeks have been a gift. Mortgage rates are down which has spurred refinance opportunities and helped to make homes more affordable nationwide.
Did you miss your chance to refinance this spring? Now may be your second chance. Get a live mortgage rate quote and see how far today's mortgage rates have dropped. You can get a mortgage rate online, for free, with no obligation or cost.
Click here to get today's live mortgage rates.
About the Author
Dan Green (NMLS #227607) is an active loan officer with Waterstone Mortgage. You can also connect with Dan on Twitter and on Google+.
