Mortgage and refinance rates today, Jan. 8, and rate forecast for next week

Today’s mortgage and refinance rates

Average mortgage rates nudged higher again yesterday. It’s been a dreadful start to 2022 for those who haven’t locked their rates yet. There have been increases every day, some of them big.

Unfortunately, I suspect mortgage rates might continue higher next week. There aren’t many glimmers of hope. But short periods of falls are common after such sharp rises.

So, if one of those arises next week, I might be proved wrong. But I’d be surprised if those rates recovered anything like the ground they’ve lost. Unless, that is, there’s unexpectedly bad scientific news about the Omicron variant of COVID–19 that suggests its damaging effects are likely to last longer than currently expected.

Find and lock a low rate (Jan 9th, 2022)

Current mortgage and refinance rates

Find and lock a low rate (Jan 9th, 2022)

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Should you lock a mortgage rate today?

When I last wrote this weekend edition of our daily rates report, it was before Christmas. And most were scared about the health and economic harm that Omicron might do.

I wrote then, ” … early signs are bad. And that’s likely to keep mortgage rates low, at least until we get more reliable data.” Well, we got more reliable data.

And it gives grounds for real optimism, not for the short term, of course, but for the spring and after. Read on for more details.

That changed everything. And my personal rate lock recommendations are:

• 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 personal tolerance for risk guide you.

What’s moving current mortgage rates

Soon

The Omicron variant is likely to bring a world of pain for many weeks. Even though it usually causes only mild or no symptoms in most people, the sheer volume of new cases each day will inevitably create a high demand for hospitalizations and critical care beds. And that may overwhelm medical resources in some hot spots. Worse, deaths will spike.

All this has already wreaked plenty of economic damage and there is, no doubt, more to come. So why are markets acting as if Omicron and COVID–19 have been and gone?

Well, because investors always claim that they look (and trade) at least months ahead. And most of them are buying into an optimistic – though credible – scenario of how things might look in a few months’ time.

Back to normal by springtime?

They believe that Omicron, with its sky–high transmissibility, might blow through the population quickly, reaching its peak within a couple of weeks or so. By the time it fades to normal levels, a huge proportion of Americans (and foreigners) will have been infected and will thus have high levels of immunity against all existing variants of COVID–19 – and perhaps future ones, too. In other words, we’d have achieved herd immunity.

If that were to happen, COVID–19 would quite soon switch from being a pandemic to an endemic condition, similar to seasonal flu. That’s what happened to Spanish flu a century ago. And we and the economy could get back to something approaching normal, perhaps by the time spring arrives.

Now, all this is far from certain. And some public health researchers and virus experts are not yet ready to embrace the scenario. But many are, at least as a strong possibility.

Rising mortgage rates?

And markets certainly seem to be. That’s the main reason mortgage rates have been consistently rising for more than a week.

Meanwhile, the three main forces that are acting to push mortgage rates higher, but which Omicron overshadowed, are back in the limelight. Those are:

1. Uncomfortably high inflation rates
2. The dismantling by the Federal Reserve of its pandemic–era stimulus programs
3. A continuing, strong economic recovery (admittedly, with hiccups)

Of course, mortgage rates will sometimes move lower. Such ups and downs are a constant feature of markets.

But, unless that optimistic scenario about Omicron is overtaken by events, I’m expecting that those rates will, overall, continue to head higher.

Economic reports next week

There are some important economic reports due out next week. Wednesday’s consumer price index will provide more insights into inflation in December. And Friday’s retail sales data will give guidance on how the economic recovery was doing that month at a consumer level.

The week’s key reports, below, are in bold.

But none of the other economic reports listed below is likely to cause much movement in markets unless it includes shockingly good or bad data:

• Wednesday – December consumer price index (CPI) and core CPI (CPI with volatile food and fuel prices stripped out)
• Thursday – December producer price index – another inflation measure. Plus weekly new claims for unemployment insurance to Jan. 8
• Friday – December retail sales. And the import price index, and industrial production and capacity utilization, all also for that month. Plus, January’s first reading of the consumer sentiment index

Chances are, Wednesday and Friday will be the days to watch.

Show me today’s rates (Jan 9th, 2022)

Mortgage interest rates forecast for next week

Mortgage rates might rise overall next week. But some falls may arise, simply because they often do after sustained periods of increases.

And it’s certainly possible that those will outweigh the rises. But I’d be surprised if they do unless either those key economic reports contain very bad news or we learn worrying new things about Omicron.

Mortgage and refinance rates usually move in tandem. And the scrapping of the adverse market refinance fee has largely eliminated a gap that had grown between the two.

Meanwhile, another recent regulatory change has likely made mortgages for investment properties and vacation homes more accessible and less costly.

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.

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, 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.