Mortgage and refinance rates today, Oct. 5, 2021

Today’s mortgage and refinance rates 

Average mortgage rates inched lower yesterday. That was a pleasant surprise. Because it had looked likely that they’d rise earlier that day.

This morning, markets suggest again that mortgage rates today might rise. But remember yesterday’s lesson: Even short-term predictions are suspect in the current volatile environment.

Find and lock a low rate (Oct 15th, 2021)

Current mortgage and refinance rates 

Find and lock a low rate (Oct 15th, 2021)

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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?

The market that largely determines mortgage rates seems to have adopted a holding pattern since Sept. 24 with daily rises and falls often canceling each other out. They may begin to move more decisively once Friday’s employment report is out the way.

But even a terrible employment report is likely to only delay future rises, while a better one would probably push them higher faster. And those increases are looking highly likely by comparison with the chances of sustained and significant falls.

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
• LOCK if closing in 45 days
• LOCK if closing in 60 days

However, I don’t claim perfect foresight. And your personal analysis could turn out to be as good as mine — or better. So you might choose to be guided by your instincts and your personal tolerance for risk.

Market data affecting today’s mortgage rates 

Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:

• The yield on 10-year Treasury notes held steady at 1.51%. (Neutral for mortgage rates.) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields
• Major stock indexes were higher soon after opening. (Bad 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 may happen when indexes are lower
• Oil prices climbed to $78.64 from $77.25 a barrel. (Bad for mortgage rates*.) Energy prices play a large role in creating inflation and also point to future economic activity. 
• Gold prices edged higher to $1,755 from $1,752 an ounce. (Neutral for mortgage rates*.) In general, it is 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 up to 28 from 27 out of 100. (Bad 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 40 cents on oil ones is a fraction of 1%. So we only count meaningful differences as good or bad for mortgage rates.

Caveats about markets and rates

Before the pandemic and the Federal Reserve’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. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.

So use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to rise. But be aware that “intraday swings” (when rates change direction during the day) are a common feature right now.

Find and lock a low rate (Oct 15th, 2021)

Important notes on today’s mortgage rates

Here are some things you need to know:

1. 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
2. Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
3. Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the wider trend over time
4. When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
5. Refinance rates are typically close to those for purchases. And a recent regulatory change has narrowed a gap that previously existed

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.

Are mortgage and refinance rates rising or falling?

Today and soon

There’s every reason to think that this Friday’s official employment situation report for September will influence mortgage rates. Markets are sensitive to even routine editions of that report. But this one’s even more important.

Because the Federal Reserve has signaled that it will begin to “taper” (wind down) certain programs from Nov. 3 unless that report is terrible. And one of those programs is the one that’s been keeping mortgage rates artificially low for the last 18 months. Clearly, absent the Fed’s continued support, those rates are very likely to rise.

Debt ceiling “meteor”

Meanwhile, Congress continues to squabble about the looming debt-ceiling crunch. Unless that ceiling is raised by Oct. 18, the United States will begin to default on its debts, something that would be unique in its history. It’s also likely to be uniquely damaging.

And, yesterday, the president likened such defaults to a “meteor headed to crash into our economy.” He could have gone on to note that, just as with an actual large meteor hitting the earth, the consequences would be global.

Few economists and Wall Street analysts think that the president’s remark was hyperbole. Nobody can calculate the economic damage default could wreak. But virtually every expert is convinced it will be somewhere beyond severe and just this side of apocalyptic.

And one very likely casualty would be low mortgage rates. US defaults (I can’t believe I’m writing that in a context that isn’t wholly theoretical) would almost certainly cause significant rises in the cost of all forms of borrowing, including new mortgage rates.

Importantly, while Oct. 18 is the likely date for the first defaults, it’s essential that the ceiling is raised well before then. The last time Congress played politics with it was in 2013. And, while legislators raised it before that year’s deadline, the mere fact that they allowed the possibility to seem real meant the nation’s credit rating was reduced and borrowing costs rose.

Other threats to low rates

The Fed and the debt ceiling are probably the biggest potential drivers of higher mortgage rates. But they’re far from alone. Here are two others:

1. Persistent inflation — Higher inflation almost always leads to higher mortgage and other rates. And those figures have been running warm-hot for longer than many predicted
2. Improving COVID-19 infection rates — Investors have been happy with low mortgage rates because they fear the economic consequences of the pandemic. But, since mid-September, infection rates have been falling

Naturally, it’s always possible that some huge disaster emerges that pushes mortgage rates lower again. But that seems much less likely than the action of the scary array of forces that currently seem aligned to push them higher.