Mortgage and refinance rates today, Jan. 14, and rate forecast for next week

Today’s mortgage and refinance rates

Average mortgage rates barely moved yesterday, just inching higher. On Thursday, Freddie Mac published its weekly average for conventional 30-year, fixed-rate mortgages. It was 6.33% down from 6.48% a week earlier.

Some think we’re entering a phase within which we will see mortgage rates move within a tighter band. But there are plenty of economic events that could change that, including another crucial inflation report on Jan. 27 and a Federal Reserve rate change on Feb. 1. So, nothing is very predictable.

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.

After a period of falling mortgage rates, I’m clearly considering changing my personal rate lock recommendations (below). But, first I wish to see how the Fed responds to Thursday’s inflation report.

So, for now, those 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

As economist Paul Krugman wrote yesterday for the New York Times, “Thursday’s report on consumer prices was really good news. I mean, really, really good news.”

Pretty much everyone will be delighted, including the Federal Reserve. But, for the Fed its joy will be tempered by some dread.

For months now, the central bank has struggled to persuade markets that they should not expect a return to low interest rates anytime soon. But investors seem to think the Fed’s kidding.

And now there is a significant gap between the bank’s and investors’ expectations for future interest rates. Personally, I think the Fed will win this battle of expectations. Its institutional memory is still scarred by its experiences in the early 1980s.

Back then, inflation had been chronic and high — much more so than we’ve seen recently. And the Fed’s rate hikes to rein in that inflation were sharp and sustained. And they led to a very painful recession. No wonder the bank stopped its rate increases as soon as it could.

But it stopped them too soon. Inflation was playing possum and quickly rose again. And the Fed had to start hiking rates again, triggering another recession.

That was 40 years ago and many investors seem to have forgotten the lesson. But the Fed certainly hasn’t.

This looks to me as if we are due a crunch: when investors’ sunny optimism crashes into the Fed’s steely determination. If I’m right, we might see mortgage rates rise sharply when that crunch comes.

I don’t know when that will be. However, it could be as soon as Feb. 1. That’s when the central bank is due to unveil its next rate hike.

Economic reports next week

By far the most important economic report due next week concerns retail sales for December. That will show how the economy is holding up after a year of rising interest rates.

Important reports and events are shown in bold in the following list. And I doubt any others will move mortgage rates far unless they reveal shockingly good or bad data.

• Wednesday — Retail sales for December. Plus that month’s producer price index (PPI) and industrial production and capacity utilization
• Thursday — Initial jobless claims for the week ending Jan. 14

Some senior Fed officials will be making speeches or media appearances next week. Markets may be especially sensitive to their remarks.

Mortgage interest rates forecast for next week

With luck, mortgage rates might be due a quiet seven days. However, much depends on markets’ reactions to Fed comments.

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.