Mortgage and refinance rates today, Mar. 18, and rate forecast for next week

Today’s mortgage and refinance rates

Average mortgage rates dropped appreciably yesterday. Using Mortgage News Daily’s archives, those for conventional, 30-year, fixed-rate mortgages closed last night at 6.55% for borrowers with a 20% down payment, good credit and a small existing debt burden. The same figure at the same time a week earlier was 6.76%.

So, what happens next? Nobody knows. Mortgage rates are currently teetering as the banking crisis drags on. Will they fall or will they regain their footing? I can’t even hazard a guess.

So, this is another week when I must duck out on predicting those rates’ path over the next seven days.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

During the week, I changed my rate lock recommendations to reflect changes in the mortgage-rate environment. But across-the-board Float recommendations suggest a lot more certainty than there currently is.

During the week, I’ve been suggesting that you enjoy the falling-rates ride for as long as it lasts. But you should be ready to lock your rate very quickly if the banking crisis fades and mortgage rates climb again in a significant and sustained way.

In any event, my new personal rate lock recommendations are:

• FLOAT if closing in 7 days
• FLOAT 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.

What’s moving current mortgage rates

Markets hate uncertainty. But they have no choice but to endure mountains of it at the moment.

Banking crises

Banking Crisis #1 was made in America. It involved Silicon Valley Bank with Signature Bank in a secondary role. But its impact was limited by swift and effective interventions by the Federal Reserve and U.S. Treasury.

Banking Crisis #2 was made in Switzerland, like Toblerone and Rolex watches. And it, too, was largely defused when the Swiss equivalent of our Fed extended a $53.7 billion line of credit to Credit Suisse, a bank with a history of dysfunction. There’s now talk of Credit Suisse merging with the country’s bigger, more stable bank, UBS.

Are we seeing Banking Crisis #3 in the shape of First Republic Bank? Its shares plunged 30% yesterday. And that was after a group of larger banks deposited $30 billion into its coffers. But many experts expect a stronger bank to soon take over First Republic, solving any problem it currently presents.

The questions now are whether more banking crises will emerge. And whether the fixes put in place to solve the earlier ones hold.

On Thursday, U.S. Treasury Secretary Janet Yellen reassured lawmakers on Capitol Hill that the American banking sector is in fundamentally good shape. And it’s true that those banks are a lot stronger than they were back in 2008.

But are the sector’s troubles in the rearview mirror? Only time will tell.

Next Wednesday’s Fed rate announcement

The Federal Reserve’s rate-setting committee begins a two-day meeting next Tuesday. It’s formally called the Federal Open Market Committee (FOMC) and it will announce on Wednesday afternoon whether it will be hiking interest rates again — and, if so, by how much.

Most investors are currently expecting a 0.5% (50-basis-point) rise that day. And, if that’s what the FOMC announces, it probably won’t affect mortgage rates much. A bigger one (unlikely) could send them higher.

But, if another banking crisis emerges between now and next Wednesday, the FOMC might choose a smaller hike, no hike or even (unlikely) a cut. Any of those might send mortgage rates falling further.

As important as the rates announcement will be the forecasts and commentary contained in the report that it accompanies. That’s due to be published at 2 p.m. (ET) next Wednesday. Look out, too, for Fed Chair Jerome Powell’s equally crucial news conference, which is scheduled for 30 minutes later.

Unpredictable

None of that means mortgage rates will necessarily fall next week. They might. But, if investors think the banking crises are dead, they may start moving money back into stocks.

As they sell bonds to buy those, bond prices will fall and yields will rise. Mortgage rates are largely determined by yields on a type of bond, the mortgage-backed security (MBS). And, if MBS yields rise, mortgage rates almost always follow.

Hmmm. You see what I mean about uncertainty. Next week is a toss-up.

Economic reports next week

There’s very little on next week’s calendar of economic events that is likely to move mortgage rates far. Except, of course, for the FOMC’s rate announcement on Wednesday (see above).

Of course, banking crises don’t appear on calendars and more of those could certainly affect mortgage rates.

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 existing home sales
• Wednesday — FOMC rate announcement and report (2 p.m. (ET)) followed by news conference (2:30 p.m. (ET))
• Thursday — New home sales for February. And initial jobless claims for the week ending Mar. 18
• Friday — March purchasing manager indexes for the services and manufacturing sectors from S&P Global (initial readings)

It’s all about Wednesday. And any other day with a banking crisis.

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

Mortgage interest rates forecast for next week

Once again, the future is too murky for me to provide any guidance for where mortgage rates will go next. I’m sorry. But any prediction I were to make would be empty speculation.

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.