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Are We Seeing Mortgage Rates Tick Higher? | September 16, 2021

·6 min read

Content provided by Credible Operations, Inc. NMLS# 1681276, “Credible.” Not available in all states. www.nmlsconsumeraccess.org

Since yesterday, mortgage and refinancing rates have ticked higher in response to changing market activity. 

While the shift in interest rates was minor, investors know the Federal Reserve will eventually raise interest rates as the economy recovers. 

Current mortgage refinance rates for September 16, 2021

The Federal Reserve’s FOMC is meeting next week—the committee must determine if substantial progress has been made by the economy. If so, the committee can move to buy fewer bonds and help push interest rates higher in the near future. 

This week’s mortgage refinance rates are slightly higher in some places, often pointing to a demand for one loan duration over another.

  • 30-year fixed refinance rates: 2.750%, unchanged since September 14th

  • 20-year fixed refinance rates: 2.375%, unchanged overnight

  • 15-year fixed refinance rates: 2.000%, unchanged from yesterday

  • 10-year fixed refinance rates: 2.000%, up from 1.875% yesterday

Rates last updated on September 16, 2021. These rates are based on the assumptions shown here. Actual rates may vary.

Make sure to shop around and compare rates with multiple lenders if you decide to refinance. You can do this easily with Credible’s free online tool and see prequalified rates in only three minutes.

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Like refinancing rates, mortgage rates for home purchases have ticked up slightly. Where changes occur, you may note a higher demand for that type of loan. At the same time, the mortgage industry is still waiting for the Fed to raise interest rates or announce new monetary policies.

  • 30-year fixed mortgage rates: 2.750%, unchanged since September 10th

  • 20-year fixed mortgage rates: 2.375%, unchanged overnight

  • 15-year fixed mortgage rates: 2.000%, up ↑ from 1.990% yesterday

  • 10-year fixed mortgage rates: 2.000%, up from 1.875%

Rates last updated on September 16, 2021. These rates are based on the assumptions shown here. Actual rates may vary.           

Remember that the real estate bubble might not have burst, but properties are not as plentiful as they once were. Children have started school, the economy is starting to recover, and you may want to lock in a lower mortgage rate before they surge.

How to qualify for a lower mortgage rate

Many factors influence the mortgage rate and terms a lender may offer you. The factors lenders will consider include:

  • Your credit scores and credit history

  • How much you want to borrow

  • The repayment term you’re seeking

  • How much downpayment you have

  • Your income

  • Other factors

Fortunately, you can take steps to make yourself as appealing as possible to potential lenders —  and score the best mortgage rate available to you: 

  1. Pay off debt. Reducing other debts before you apply for a mortgage can help improve your credit score by reducing your debt-to-income ratio. It can also help ensure you’ll have enough disposable income to be able to make your monthly mortgage payment. 

  2. Go for a shorter term.  Ten-year and 15-year mortgages tend to have the lowest interest rates. That’s because the shorter term means less risk for lenders. If you’re able to swing a higher monthly payment, a shorter term could mean a lower interest rate and big interest savings for you over the life of the loan. 

  3. Put as much down as you can. Lenders —  and many sellers —  like to see a down payment of at least 20% (more if you’re able). A bigger down payment could help you get a lower rate, set you apart from other buyers, and help you avoid costly private mortgage insurance (PMI).

  4. Check out first-time homebuyer programs. There are federal and state programs that help first-timers with down payments, closing costs, lower interest and more. Some even offer grants.

  5. Maintain your income . Try to  avoid changing or quitting jobs before you apply for a mortgage. 

  6. Consider mortgage points. Mortgage points are a closing cost that you pay to the lender up front in exchange for a lower interest rate. While the points may feel like a big hit at first, a lower interest rate could add up to big interest savings over the life of a mortgage. 

Mortgage interest rates forecast

Mortgage rates are closely tied to the federal funds rate —  the interest rate banks charge each other when borrowing or lending their excess reserves overnight. The Federal Reserve sets a target rate for banks to follow. 

When the economy isn’t great, the Fed may lower rates, and mortgage rates usually fall too, since it becomes cheaper for lenders to make loans. When the economy improves, the Fed may raise rates to try to contain inflation —  and mortgage rates could climb.

While no one can exactly forecast how mortgage rates will behave, that federal funds rate and inflation are among several key indicators that experts can consider when making predictions. Researchers  at the Mortgage Bankers Association, Freddie Mac and Fannie Mae all predict —  to varying degrees —  that  mortgage rates will rise throughout 2021. 

But keep in mind that average rates are no guarantee of the rate you might qualify for when applying for a mortgage. Your credit score, down payment amount, income and many other factors will also come into play.

For your next home purchase, consider using Credible. You can check current mortgage rates from all of our partner lenders without affecting your credit score. Our free online tool is safe and simple to use — and it only takes a few minutes to prequalify.

What causes mortgage rates to fluctuate?

While mortgage rates change based on the economy, your lender will offer different based on a few common factors, including:

  • Inflation - As inflation rises, lenders and buyers have less buying power. Therefore, it simply costs more to get a mortgage.

  • Economic conditions - As the economy changes, mortgage rates shift. Plus, the economic status of a lender could affect its rates.

  • The Federal Reserve - The Fed responds to economic conditions, setting interest rates that will protect the value of the dollar.

  • Origination cost - The cost of getting a mortgage varies from one lender to another. Ensure that the lender you use offers low prices and explains everything upfront.

  • Your own financial/credit history - A low debt-to-income ratio will help you obtain approval. You should also pay off debts to increase your credit score and save for a down payment as soon as possible. 

 

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