Why Are Mortgage Rates Ticking Down While Refi Rates Stay Level?
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On Tuesday, mortgage rates have dropped slightly for home purchases, while those for refinancing have remained largely unchanged.
As rates shift, you can lock in a rate with your current mortgage broker, especially as investors wait for the Fed to raise rates. At the same time, certain mortgage products will increase or decrease based on demand.
Current mortgage refinance rates for September 21, 2021
The Fed inches ever-closer to releasing its predictions for interest rate hikes for the next 3 years. Some mortgage companies might raise their rates prematurely, but average rates have remained unchanged.
30-year fixed refinance rates: 2.875%, unchanged from yesterday
20-year fixed refinance rates: 2.500%, unchanged overnight
15-year fixed refinance rates: 2.125%, unchanged since Monday
10-year fixed refinance rates: 2.000%, steady since yesterday
Rates last updated on September 21, 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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Unlike today’s refinance rates, home purchase rates are ticking down slightly.
30-year fixed mortgage rates: 2.750%, down ↓ from 2.875% yesterday
20-year fixed mortgage rates: 2.500%, unchanged since Monday
15-year fixed mortgage rates: 2.000%, down ↓ from 2.125% yesterday
10-year fixed mortgage rates: 2.000%, unchanged overnight
Rates last updated on September 21, 2021. These rates are based on the assumptions shown here. Actual rates may vary.
Remember that interest rates could increase at any time if the Federal Reserve believes the U.S. economy has recovered. Even so, the market could shift unexpectedly as investors wonder when interest rates will rise.
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:
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.
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.
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).
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.
Maintain your income . Try to avoid changing or quitting jobs before you apply for a mortgage.
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?
Understanding interest rates can help you make wise decisions. Factors affecting mortgage rates include:
Inflation - If inflation rises, your spending power drops.
Economic conditions - The condition of the economy changes based on jobs data, consumer pricing data, stock market performance, etc. This, in turn, can cause changes in mortgage rates.
The Federal Reserve - The Federal Reserve Board sets interest rates in an effort to stabilize the economy.
Origination cost - Your lender impacts interest rates and costs by charging several fees during the process. Search for the best combination of terms and rates.
Your own financial/credit history - Try to keep your DTI as low as possible while also paying off debt. By doing so, you can improve your credit score.
The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
