Mortgage and refinance rates today, Jan. 28, and rate forecast for next week

Today’s mortgage and refinance rates

Average mortgage rates yesterday moved slightly upward. And they did the same over the last seven days. But such tiny ups and down make little material difference to your next mortgage

The Federal Reserve is due to announce its latest rate hike next Wednesday. Assuming it delivers a small, 0.25% (25-basis-point) increase, mortgage rates should stay low and perhaps dip a little lower. That seems the most likely scenario to me, although there are other potential trigger points for rises next week.

Current mortgage and refinance rates

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.

I remain optimistic that mortgage rates might remain where they are or move lower over the next few months. However, please be aware that this prediction is based on a balance of probabilities and involves zero certainties.

Anyway, my personal rate lock recommendations are:

• LOCK if closing in 7 days
• LOCK if closing in 15 days
• FLOAT if closing in 30 days
• FLOAT if closing in 45 days
• FLOAT 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.

Why are the first two recommendations still to lock? Because there’s too much risk of volatility to take chances so near to closing. Of course, if you’re happy with that risk, float away.

What’s moving current mortgage rates

The Federal Reserve doesn’t determine mortgage rates. But it certainly influences them, sometimes to a great extent. And now is one of those times.

So, next Wednesday could be hugely important for mortgage rates. Because that’s the day the Fed announces its next rate hike.

Pretty much everyone’s expecting a 0.25% (25-basis-point) rise that day, with the CME FedWatch tool putting the probability at 98.4%. If that’s what’s announced, it will be the first time we’ve had such a small hike since Mar. 17, 2022. Since then, we’ve had two 0.5% increases and four of 0.75%.

For you and me, the downside of everyone expecting an economic event is that investors will have traded ahead of the announcement based on that expectation. So the small hike has been baked into mortgage rates already.

And that means those rates are unlikely to move far on Wednesday afternoon’s news. Unless, that is, the Fed unveils an unexpectedly big hike, in which case mortgage rates would likely rise significantly. I’m not expecting that but you can’t rule it out.

Of course, if the Fed were to announce no rate hike, that would almost certainly send mortgage rates tumbling. But don’t hold your breath because that’s exceedingly unlikely.

The rate announcement is due at 2 p.m. (ET) on Wednesday and will be followed by a news conference 30 minutes later.

Other events next week

There are a few other economic publications next week that could affect mortgage rates. By far the most important is the official employment situation report (aka the jobs report) for January, due out next Friday morning.

Markets are expecting the labor market to have tightened in January with fewer new jobs, a slightly higher unemployment rate and stagnant hourly earnings compared to December.

If that’s what Friday’s report shows, it could send mortgage rates lower, depending on the scale of the changes. But a more resilient labor market might push those rates higher.

There are a few other reports due next week that could affect mortgage rates. But they’re unlikely to move them far unless they deliver news that’s wildly out of line with expectations.

Economic reports next week

Read in the previous sections about the two economic events most likely to move mortgage rates next week.

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.

• Tuesday — Q4/22 employment cost index and November home price indexes from S&P Case-Shiller and the Federal Housing Finance Agency. Plus January consumer confidence index
• Wednesday — Fed rate hike announcement. Also, December job openings and labor turnover survey (JOLTS) and January’s private-sector employment report from ADP. Plus January manufacturing indexes from S&P and the Institute for Supply Management (ISM)
• Thursday — Q4/22 productivity and unit labor costs. And December factory orders and core capital goods orders. Plus initial jobless claims for the week ending Jan. 28
• Friday — January’s employment situation report, including nonfarm payrolls (new jobs), unemployment rate and average hourly earnings. Plus January indexes from the ISM and S&P for the services sector

Next Wednesday could be pivotal for mortgage rates and next Friday could see appreciable movements. But I hope not.

Time to make a move? Let us find the right mortgage for you

Mortgage interest rates forecast for next week

What happens to mortgage rates next week will likely be down to the Fed and January’s jobs report. I’m hopeful that both of those will allow these rates to hold steady or fall. But nobody can be sure.

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.