Mortgage and refinance rates today, Mar. 4, and rate forecast for next week

Today’s mortgage and refinance rates

Average mortgage rates fell satisfyingly yesterday. But that didn’t reflect the week overall. Indeed, Friday’s drop didn’t even cancel out Thursday’s rise. And, over the last seven days, mortgage rates climbed appreciably higher.

Next week really could see mortgage rates move either way. That Friday’s jobs report for February will likely be pivotal.

It was January’s edition of that same report that triggered February’s disastrous rises in mortgage rates. Another good report (lots of new jobs) could push those rates higher, while a bad one could pull them downward.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

In spite of two falls in mortgage rates last week, the mood in markets remains grim. That could change next Friday when February’s jobs report is published. But if that report shows the labor market holding up well, it might deepen the gloom. So, banking on a sudden loosening in the employment market looks a risky strategy to me.

Of course, mortgage rates will still fall on some days and perhaps for longer periods. But, unless critical economic data suddenly become more friendly to rates, I doubt that those falls will outweigh the rises surrounding them for at least several weeks — and maybe several months.

Anyway, new 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 own tolerance for risk help guide you.

What’s moving current mortgage rates

It’s impossible to overstate how important next Friday’s jobs report (the “employment situation report” is its official title) could be. If you were to look at a graph of mortgage rates, you’d see that those rose on the day the last such report was published and have kept rising since.

And, no, that’s not a coincidence, though it was a smart question to raise. The Federal Reserve sees employment as a critical gauge of how it’s doing in its fight against inflation. And, as long as plenty of new jobs are being generated each month, it will assume that it must continue to hike interest rates.

You probably know that the Fed doesn’t directly set mortgage rates. But it sure does strongly influence the bond market that does. And the prospect of higher general interest rates is almost bound to keep pushing mortgage rates higher.

Next Friday

So, markets will probably spend the next four business days laying bets on what that Friday’s jobs report will say. Will the labor market finally be tightening (few new jobs) or will it remain remarkably buoyant?

Investors will likely wager based on what analysts expect the report to say. And I don’t envy those analysts their role.

Because last month’s report (for January) was an extraordinary outlier. For that month, analysts had forecast new jobs at 187,000. But the actual figure came in at 517,000.

Naturally everyone was shocked. And it was that shock that sent mortgage rates soaring, a trend that’s continued since.

Next Friday by the numbers

So what is the analysts’ consensus forecast for next Friday’s report? It’s currently 225,000 new jobs, according to MarketWatch, though that could change as the report gets closer.

If the new report shows significantly more than 225,000 new jobs created during February, that could send mortgage rates powering higher. If it shows many fewer, mortgage rates might fall. And, if the actuals are close to that forecast, those rates might barely move.

Obviously, nobody can be sure what the next jobs report will say. And, if you’re feeling lucky, you might wish to hang on for that report before locking your mortgage rates. There’s a reasonable chance your bet will pay off.

But remember the stakes involved. Personally, I would be horrified by the thought of wagering my next mortgage rate on something so unpredictable.

To me, the risk of being wrong is just too great. But it’s only your tolerance for risk that’s in play here.

Other events next week that could affect mortgage rates

The employment situation report may be the pivotal event for mortgage rates next week. But there are others that may have appreciable but lesser impacts.

In particular, Federal Reserve Chair Jerome Powell will be on Capitol Hill next Tuesday and Wednesday testifying before House and Senate committees. Currently, Mr. Powell can barely raise an eyebrow without markets responding. So, what he says next week might easily move mortgage rates.

There are also a couple of secondary employment reports due out on Wednesday. The more important is the job openings and labor turnover survey (JOLTS) report for January, which produces data on job openings, hires and separations. The second is the ADP employment survey, which is sometimes seen as a bellwether for Friday’s jobs report.

And, finally, Fed Gov. Christopher Waller will be speaking publicly next Thursday. Often, these events pass without causing so much as a ripple. But we saw last week that they sometimes can affect mortgage rates.

Economic reports next week

I covered all the big economic reports and events next week in the previous section. The important ones of those are shown in bold in the following list. And I doubt others will move mortgage rates far unless they reveal shockingly good or bad data.

• Tuesday — Fed Chair Jerome Powell testifies to Senate committee
• Wednesday — January job openings and labor turnover survey (JOLTS) and February ADP employment report. Plus Fed Chair Jerome Powell testifies to House committee
• Thursday — Initial jobless claims for the week ending Mar. 4. Plus Fed Gov. Christopher Waller speaks
• Friday — February employment situation report (“jobs report”)

Friday’s jobs report could be crucial to future mortgage rates.

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

Mortgage interest rates forecast for next week

Unless Fed Chair Jerome Powell says unexpected things in his testimony on Capitol Hill, I suspect mortgage rates will drift slightly higher during the first four days of next week. But everything could change with that Friday’s jobs report. And I have no idea what that will say.

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 rate 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 2023

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.