Today’s Mortgage Rates and Lock Recommendation

Mortgage Rates Today for June 22, 2021

mortgage rates today, today's mortgage rates

Today’s Mortgage Rates

Program

APR

Change

Conforming 15-Year Fixed 2.25% 0.00%
Conforming 30-Year Fixed 2.83% -0.01%
FHA 15-Year Fixed 3.52% -0.23%
FHA 30-Year Fixed 3.70% 0.19%
VA 15-Year Fixed 2.61% 0.12%
VA 30-Year Fixed 2.62% 0.02%

Get a custom mortgage rate quote now.

What’s Affecting Mortgage Rates Today?

 

Today’s mortgage rates opened mostly higher today. This is primarily because some Fed governors spoke and indicated that the Fed may taper off their purchases of long-term Treasuries and mortgage-backed securities (MBS). When the government stops buying these financial instruments, demand for them will fall and prices will too. And when bond prices are lower, interest rates are higher (see the explanation below “How Bonds Work”).

The only scheduled economic news today is the Existing Home Sales report. Sales dropped (for the fourth straight month) to an annualized rate of 5.8 million. Falling sales don’t mean a soft economy, however. In this case, the cause is low housing inventory. The median existing-home price increased year-over-year by 23.6% in May 2021. Properties typically sold in 17 days. That’s bad news for mortgage rates because it’s inflationary.

Should You Lock Your Mortgage Rate Today?

It makes sense for most borrowers to lock in now. Mortgage rates are still low (although higher than yesterday’s) but the overall trend is upward.
 
However, if you need to float your mortgage rate for a day or two to get into a lower pricing tier (for instance, a 15-day lock instead of a 30-day lock), you can probably do so safely.
 
Closing (Days) Recommendation
7 days LOCK
15 days LOCK
30 days LOCK
45 days LOCK
60 days LOCK
>60 days FLOAT

Locking isn’t always a no-brainer for longer periods, even in a rising rate environment, because locking a loan costs money. The interest rate you’ll get with a 7-day lock is lower than that of a 15-day lock, and so on. Locks longer than 30 days often come with up-front fees (.5% is typical for 60 days). If you can get a longer lock at a decent cost today, you should probably go for it.

What Does it Mean to “Lock” Your Mortgage?

When you apply for a home loan, your lender gives you documents with that day’s interest rate on them. But interest rates change all the time. In fact, mortgage rates can change more than once a day. So you don’t know what your actual mortgage rate will be until you lock it in. Once you lock, you’ll close at that rate as long as your application does not change significantly and you close within your lock period.

Lock periods range from 7 days to 180 days or more. Shorter lock periods are less risky to your lender and less expensive to you. Most lenders quote rates with 30-day locks. Until you lock your loan, you are said to be “floating.” You cannot close your loan until you lock. 

Are Mortgage Rates Going Up or Down?

Mortgage rates are trending higher. Every well-known mortgage rate forecast predicts interest rates rising in 2021. As the economy recovers from the pandemic, expect prices to surge, inflation to become a concern, and mortgage rates to increase.

If you can get your mortgage sooner rather than later, you’ll probably get a much better rate than if you wait until 2022.

See if you qualify for a home loan in just 5 minutes.

How mortgage rates and financial markets look like today

Financial Markets and Today’s Mortgage Rates

Today’s indicators are all over the place. There are some extreme but offsetting position and thigs could go either way. There is a slight bias toward lower mortgage rates. Keep an eye on oil prices and the 10-year Treasury yields if you are contemplating a rate lock. Here are the data influencing mortgage rates today:

Stocks

Major stock indexes opened slightly higher this morning. Stock market prices are reasonably good predictors of interest rates. When stocks increase, the economy is heating up. This usually leads to higher mortgage and other interest rates. Falling stock prices normally correlate with lower interest rates. This morning’s prices are slightly bad for today’s mortgage rates.

Treasury Yields

 The 10-year Treasury note increased by .01% to  1.49%. Yields on 10-year Treasuries usually move in the same direction and degree as mortgage rates, so today’s move is slightly bad for mortgage rates.

Oil Prices

Oil prices fell $.12 to  $73.31 per barrel. That’s neutral for mortgage rates. Because oil is necessary for most economic activity in the US, rising oil prices trigger fears of inflation. This often causes interest rates to increase, while falling oil prices generally cause interest rates to drop.

Gold Prices

The price of gold edged $6 lower to $1777 per ounce. Rising gold prices often indicate economic weakening and lower interest rates, but rates often increase as gold prices fall. This change is neutral for today’s mortgage rates.

Fear and Greed

CNNMoney’s Fear & Greed Index measures how optimistic or pessimistic market participants are by using a variety of formulas. When investors are optimistic or greedy, mortgage rates tend to increase. And when investors become more fearful, interest rates fall. Today’s index rose 1 point to a “fearful” 33. The scope and direction of this movement are slightly bad for mortgage rates.

This Week’s Economic Schedule

This week brings a handful of important releases, the most important day being Friday.

Monday

No scheduled releases.

Tuesday

Existing Home Sales for May tracks the US housing sector strength and can point to future demand for mortgages and pressure on mortgage rates. Experts expect that sales declined to an annual rate of 5.68 million. More sales are usually bad for mortgage rates and fewer sales are good — if they indicate a slowing economy. However, this decline is mainly due to low inventory and does not reflect demand, so investors may ignore the data this month.

Wednesday

May’s New Home Sales report reveals sales of newly-constructed houses in the US. Economists predict that sales increased to an annualized rate of 873,000 homes. Higher numbers would be good for the economy but bad for mortgage rates. And fewer sales would be good for mortgage rates, indicating less demand for home loans.

Thursday

Last week’s unemployment claims have been predicted to fall to 380,000. More claims would be bad for the economy but good for mortgage rates. Fewer claims would be good for the recovery but possibly lead to inflation — bad for mortgage rates.

May’s Durable Goods Orders report is fairly important. It tracks orders for big-ticket items like cars and planes. Increasing orders are good for the economy but can trigger inflation fears, lower bond prices, and higher mortgage rates. The experts predict a 2.7% increase. Bigger numbers would be bad for bond yields and mortgage rates, while lower numbers would be good.

Friday

Consumer spending, personal income, and the Consumer Price Index track inflation at the consumer level of the economy. It’s a significant report. Economists predict that personal income fell 2.7% in May while consumer spending increased .3% and the CPI rose .6%. Higher numbers would be bad for mortgage rates. Lower ones would indicate economic cooling, and that would be positive for mortgage rates.

In addition, the University of Michigan’s Index of Consumer Sentiment (preliminary reading for June) gauges consumer confidence in the economy.  The index is expected to edge up slightly to 86.6. Higher consumer confidence means more spending and possible inflation, so lower numbers could be better for mortgage rat

Why Mortgage Rates Change

In general, a strengthening economy causes interest rates (including mortgage rates) to increase. That’s because an expanding economy can increase the rate of inflation, and investors demand higher returns when they are concerned about inflation.

When the economy weakens, investors become less worried about how much their money earns and more worried about retaining their principal. So demand for safe investments like bonds increases, driving their prices up and interest rates down.

The example below illustrates how the economy causes prices for bonds and mortgage-backed securities (MBS) to increase or decrease – and how yields (interest rates) respond when the price of a bond or MBS changes.

How Bond Prices and Interest Rates Work

Bond issuers create $1,000 bonds paying a specific interest rate. The issue price, $1,000 per bond, is often called “par.” The interest rate for that bond is called the “coupon rate.” If you buy a $1,000 bond paying 5%, your yield would be 5% — the same as the coupon rate.

Your interest rate: $50 interest / $1,000 bond price = 5%

However, bonds don’t stay at par pricing — they trade similarly to stock shares, and their prices rise and fall all the time. These price changes are caused by events that impact the global economy. Events that point to economic expansion and possible inflation cause the demand for bonds to fall and rates to increase.

On the other hand, events that indicate economic instability or failure cause investors to desire safer investments like bonds and MBS. Demand for these instruments causes their prices to rise and rates to fall. The examples below illustrate the upward and downward interest rate movements in response to economic conditions.

When Interest Rates Fall

Suppose that after you buy a bond at par from the issuer, the economy becomes troubled. Say it’s because of a war overseas or a global pandemic. Investors demand safe places to put their money and 5% becomes a highly desirable interest rate. You sell your $1,000 bond to an investor for $1,500. The buyer gets the same $50 a year in interest that you were getting. It’s still 5% of the $1,000 coupon. However, the yield drops. Your buyer’s interest rate: $50 annual interest / $1,500 bond price = 3.33%

When Interest Rates Rise

The opposite happens when the economy gets better. Suppose that after you purchased your $1,000 bond, the pandemic is resolved with the invention of a vaccine and the warring countries overseas come to terms. The stock market comes roaring back, and 5% doesn’t look so great anymore. Investor demand falls for your bond and you can only sell it for $750. The buyer pays less and enjoys a higher yield.

Your buyer’s interest rate: $50 annual interest / $750 bond price = 6.67%

What Are Mortgage-Backed Securities (MBS)?

A mortgage-backed security is an investment similar to a bond. The security is backed by a bundle of home loans bought from mortgage lenders that issue them. Investors in MBS receive payments similar to bond coupon payments.

Most mortgage-backed securities are issued by Fannie Mae, Freddie Mac, and Ginnie Mae. These companies were supported by the government to make homeownership more accessible to consumers. Fannie Mae, Freddie Mac, and Ginnie Mae also set guidelines that banks and lenders must follow in order to protect the investors who buy MBS.

MBS are not as safe as US Treasuries, so their yields tend to run a little higher. However, they are widely viewed as safe investments and their yields (rates) tend to move in the same direction as those of Treasuries.

What Is a Mortgage Rate Float-Down and Do You Want One?

What Is a Mortgage Rate Float Down and Do You Want One?

If deciding to lock or float your mortgage rate stresses you out, there is another option — the float-down.  A float-down allows you to lock in a mortgage rate; but if rates drop before you close on your home loan, you get to close at the lower rate.

Float-downs are not free — you either pay an up-front fee for the privilege or accept a slightly higher interest rate.

Not all float-downs are the same. Some lenders only let you exercise the float-down option the day they draw your closing documents. Others allow you to lock in a lower rate any time during the process.

Still, others require the new rate to be at least a certain percentage lower than your locked rate before they let you change to the lower rate — .125 to .25 percent is typical.

Read your documents carefully, and understand what a float-down will cost you and what you’ll get for your money.

18 Comments
  1. Arlene Ann Miller says

    Great information. Thank you. This is a great help in me doing due diligence during my home refinance process.

  2. Dianne B. says

    I would like to see if I can get pre-approved
    People with worst credit than me have been able to purchase

  3. Gina Pogol says

    You can get preapproved in minutes right here! Just click the button that says “Check if you qualify.”

  4. Gina Pogol says

    I am happy that the content is helpful to you. To prequalify or get preapproved, please just click the “Prequalify Now” link and a loan officer will help you.

  5. Gina Cho says

    VA programs allow you to qualify using a debt-to-income ratio or a more-generous residual income worksheet. To see your maximum loan amount, click Prequalify Now to get expert help from our loan officers. They will take great care of you!

  6. William Brennan, Jr. says

    Hello, I am in need of a home mortgage and the FHA loan limit is too low here in Broward county. I am currently paying down all of my revolving accounts trying to raise my scores. I had decent credit until I caught Covid back in February and I had some late pays. I have brought all accounts current, but my lease is up and the owner wants the house for his daughter. I need assistance unfortunately now and not later.

    1. Gustan Cho, NMLS 873293 says

      Please contact us with your contact information at [email protected]. Let’s see if we can get you qualified on a conventional loan which has a maximum loan limit of $548,250. Looking forward to working with you and your family.

  7. Susan Tripp

    FHA CONSTRUCTION LOAN one time close. Want to know if my EDD BENEFITS can be used to qualify for this type of loan with Retirement funds.

  8. Alice McCarthy

    I have a 599 credit score and I’m trying to get approved for a VA loan and no one seems to be able to help me.

  9. […] See today’s mortgage rates.  […]

  10. Albert Greenwood

    Credit 660 / Using VA Loan
    DTI 81% w/ mortgage by myself
    Spouse Credit 570 ( here is the hurdle)
    DTI w/ spouse 42%
    Income
    80K
    Spouse 75K
    Total 155k

    Can I get approved by myself? If not, is there a lender that can approve with spouses credit score?

  11. Mary Anne Blue

    I want to get a preapproval so I will know how much home I should be shopping for.

  12. Carla Simmons

    Im looking to purchase Owner Occupied, 2 Unit Duplex. I have 10% down payment and excellent credit. Is 10% down payment enough?

  13. Samantha Stevens

    Currently in an active chapter 13 bankruptcy. Looking into FHA refinancing options and possibilities.

  14. Julio Cazanares

    I have a 2 flat + basement unit building in Chicago that I need to do a cash out refi on. I was working with Quicken loans and the week before closing they told me they will not do the loan because of the basement unit.

    I already have an appraisal ready that was done within the last month.

    Notes:
    Building is paid off
    Rent is 2500 a month
    Insurance and taxes are 600 a month
    845 N Monticello 60651 Chicago

  15. Zack G

    I am under contract for a 4 unit in Chicago (2459 W Armitage 60647) for 920k. I had been working with Guaranteed Rate on a deal where FHA was going to finance the property as a residential loan with 2 of the 4 units being commercial tenants. Over 51% of the building was residential so I had made it to closing week when the underwriter said that it would not meet the ‘self-sufficiency’ requirement as they are not allowed to use the commercial tenant leases as part of the calculation.

    My partner and I have good W2 income (~230k), are currently landlords, looking to put 20% down, had the FHA inspect and appraise the property above contract, and had an inspection performed so we are just looking for the financing piece to come together to get this property.

    Let me know if this is something you could help with & if this is a situation where the lending terms would be reasonable.

    Thanks,
    Zack Gonzales

  16. Michelle Moran

    I have a rental property I am looking to purchase and want to move forward with an application.

  17. Janet Leventhal

    We have been approved for FHA mortgage 3 years after a short sale, which allows us to only buy a single-family home. We are interested in a condo and could pr down payment of$160,000 on $415, 000 unit.

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