Mortgage and refinance rates today, Mar. 11, and rate forecast for next week

Today’s mortgage and refinance rates

Average mortgage rates plunged yesterday. And that saw them fall appreciably over the week as a whole.

However, yesterday’s sharp drop was caused by exceptional circumstances (more on those below). And we’ll have to wait and see for how long those — and lower mortgage rates — last.

As a result of that uncertainty, I'm unable to predict the direction mortgage rates might take next week. They might have further to fall or they may begin to head higher within days.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Yesterday’s sharp fall in mortgage rates had little to do with the economic reports that normally influence them. Instead, it was down to Friday’s shuttering by regulators of Silicon Valley Bank. I’ll explain what happened in the next section.

But we’re in largely unchartered waters here, which means it’s impossible to predict whether this is a longer-term crisis or a short, sharp shock that could see mortgage rates rising within a matter of days.

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

Boy, was I confused yesterday morning. I read February’s jobs report and thought, “Uh-oh, it’s going to be a bad day for mortgage rates.” Then I looked at markets and saw those rates tumbling. What was going on?

Well, I checked CNBC’s website, which is particularly good at covering bond markets. Mortgage rates are largely determined by a bond market.

But, at that time, CNBC’s only suggestion was that those markets were ignoring the excellent (bad for mortgage rates) number of new jobs that were created in February. Instead, investors were choosing to focus on average hourly earnings.

So, I went with that narrative in yesterday’s daily rates report. And I couldn’t have been more wrong.

What changed yesterday

What was actually happening was a shock reaction to the second-biggest bank collapse in American history. Investors were selling stocks and moving their money into safer bonds (a “flight to safety”), including U.S. Treasury ones and mortgage-backed securities (MBSs).

As with all commodities, the extra demand for MBSs pushed their prices higher. But, with all bonds, yields move inversely to prices, so MBS yields tumbled. And lower MBS yields almost always mean lower mortgage rates.

The bank that collapsed was Silicon Valley Bank (SVB). And, ironically, it was brought down by owning too many bonds.

It had bought long-term Treasury bonds. The Wall Street Journal (paywall) explains:

“These securities are at virtually no risk of defaulting. But they pay fixed interest rates for many years. That isn’t necessarily a problem, unless the bank suddenly needs to sell the securities. Because market interest rates have moved so much higher, those securities are suddenly worth less on the open market than they are valued at on the bank’s books. As a result, they could only be sold at a loss.”

How long will this last?

And so we come to the $64,000 question. Will the current flight to safety continue, dragging mortgage rates lower for some time to come? Or will it turn out to be a flash in the pan, with mortgage rates heading higher again, perhaps within a matter of days?

Overnight, The Financial Times (paywall) ran the headline, “SVB’s collapse is not a harbinger of another 2008.” However, it continued: “But the U.S. bank favored by tech startups will not be the last casualty of higher interest rates.”

So, how long the current downward movements in mortgage rates last will probably depend on whether — and how many — more banks quickly follow SVB.

If markets soon come to perceive the SVB collapse as an isolated event, mortgage rates could be rising again within days. But if other banks encounter the same fate, and a banking crisis emerges, we might see those rates falling for months.

Unfortunately, this is one of those wait-and-see situations.

Economic reports next week

If the SVB issue snowballs into a full-blown banking crisis, even the most important reports on next week’s calendar may fade into insignificance. But I’ll assume that won’t happen even though I can’t be sure. Just read the list with that in mind.

By far the most important economic report next week is the consumer price index (CPI), which lands on Tuesday morning. That could materially change the size of the Federal Reserve’s next rate hike, due Mar. 22. For lower mortgage rates, we want to see the CPI showing prices rising much more slowly in February than previously.

Wednesday brings retail sales figures for February and we’d like to see them falling. Also that day, we’ll get the producer price index, which is a gauge of future inflation, so the lower the better. The import price index is due on Thursday, which is yet another measure of future inflation.

We show important economic reports in bold in the following list. And I doubt others will move mortgage rates far unless they reveal shockingly good or bad data.

• Tuesday — February consumer price index. Plus NFIB small-business optimism index
• Wednesday — February retail sales and producer price index.
• Thursday — Import price index for February. And initial jobless claims for the week ending Mar. 11. Plus housing starts and building permits for February
• Friday — February industrial production and capacity utilization. Plus consumer sentiment in March.

Tuesday should be the big day next week. Unless, that is, fear of more bank collapses overshadows the CPI.

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

Mortgage interest rates forecast for next week

We’re in the very early stages of a new situation. If markets perceive SVB’s collapse as a one-time event, we might soon be seeing mortgage rates rising again. But if fear of a larger banking crisis overtakes Wall Street, we could witness lower mortgage rates for weeks to come — or longer.

Unfortunately, I have no idea which way things will go. So, it’s another week without a rates prediction for the following seven days, I’m afraid.

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.