Mortgage and refinance rates today, Dec. 24, and rate forecast for next week

Today’s mortgage and refinance rates

Average mortgage rates rose again yesterday and ended the week appreciably higher than they started it.

We’re in a strange period for mortgage rates. Many desks on Wall Street and in other financial centers are vacant as traders extend their holiday breaks. So, it takes many fewer trades to move those rates than normal. That makes for unpredictability and has the potential to create volatility.

Current mortgage and refinance rates

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Should you lock a mortgage rate today?

Don’t lock on a day when mortgage rates look set to fall. My recommendations (below) are intended to give longer-term suggestions about the overall direction of those rates. So, they don’t change daily to reflect fleeting sentiments in volatile markets.

This time last week, I wrote: “I’m much more positive about where mortgage rates will go in 2023.” That’s still partly true. I’d wager that they’ll be lower at the end of that year than at its start. But I’m less optimistic about the first quarter than I was only seven days ago.

And so, for now, 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, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.

What’s moving current mortgage rates

We’ll probably have to wait for the first full week in January to get a real feel for what’s happening to mortgage rates. There’s usually seasonal volatility at this time of year. And that can mask changes in the investor sentiment that largely determines mortgage rates.

Mortgage rates may have moved higher this week solely as a result of that seasonal volatility. Or it could be that investors are having second thoughts about the positivity with which they greeted Federal Reserve events last week.

Surprisingly strong economic data this week may well mean that interest rates (and mortgage rates) remain higher for longer than anyone has been anticipating. The Fed’s rate hikes were supposed to slow the economy but there’s little sign of that happening anytime soon. So, the central bank may have to keep up the pressure through the first half of 2023.

Still, let’s not get too gloomy until we get to see what happens to mortgage rates as next year kicks off.

Economic reports next week

Next week is an exceptionally quiet one for economic reports, as you might expect. And I doubt any will move mortgage rates far unless they reveal shockingly good or bad data.

• Monday — Markets closed
• Tuesday — October home price indexes from S&P Global and the Federal Housing Finance Agency
• Wednesday — November pending home sales index
• Thursday — Initial jobless claims for the week ending Dec. 24

There’s not much to watch out for next week.

Mortgage interest rates forecast for next week

We can’t even be sure what’s driving movements in mortgage rates over the holiday period. So I stand zero chance of accurately predicting how they’ll change over the next seven days.

How your mortgage interest rate is determined

Mortgage and refinance rates are generally determined by prices in a secondary market (similar to the stock or bond markets) where mortgage-backed securities are traded.

And that’s highly dependent on the economy. So mortgage rates tend to be high when things are going well and low when the economy’s in trouble. But inflation rates can undermine those tendencies.

Your part

But you play a big part in determining your own mortgage rate in five ways. And you can affect it significantly by:

1. Shopping around for your best mortgage rate — They vary widely from lender to lender
2. Boosting your credit score — Even a small bump can make a big difference to your rate and payments
3. Saving the biggest down payment you can — Lenders like you to have real skin in this game
4. Keeping your other borrowing modest — The lower your other monthly commitments, the bigger the mortgage you can afford
5. Choosing your mortgage carefully — Are you better off with a conventional, conforming, FHA, VA, USDA, jumbo or another loan?

Time spent getting these ducks in a row can see you winning lower rates.

Remember, they’re not just a mortgage rate

Be sure to count all your forthcoming homeownership costs when you’re working out how big a mortgage you can afford. So, focus on your “PITI.” That’s your Principal (pays down the amount you borrowed), Interest (the price of borrowing), (property) Taxes, and (homeowners) Insurance. Our mortgage calculator can help with these.

Depending on your type of mortgage and the size of your down payment, you may have to pay mortgage insurance, too. And that can easily run into three figures every month.

But there are other potential costs. So you’ll have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repairs and maintenance costs. There’s no landlord to call when things go wrong!

Finally, you’ll find it hard to forget closing costs. You can see those reflected in the annual percentage rate (APR) that lenders will quote you. Because that effectively spreads them out over your loan’s term, making that higher than your straight mortgage rate.

But you may be able to get help with those closing costs and your down payment, especially if you’re a first-time buyer. Read:

Down payment assistance programs in every state for 2021

Mortgage rate methodology

The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The result is a good snapshot of daily rates and how they change over time.