Mortgage and refinance rates today, Mar. 25, and rate forecast for next week

Today’s mortgage and refinance rates

Average mortgage rates fell moderately yesterday. And they’ve had a good week, too.

We’ve seen some uncertainty removed from markets this week. But there’s still plenty of it around. My guess is that we might see mortgage rates gently drift lower next week. However, sharper falls are possible if a new banking crisis emerges. And it’s possible they could rise on Friday if that day’s inflation report shows prices rising more steeply than expected.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

There’s no such thing as a week in which mortgage rates can’t rise. But next week seems less likely than most to bring an increase.

So, no. I wouldn’t lock my mortgage rate today if I were you. There is a chance of a rise on Friday if that day’s personal consumption expenditures (PCE) price index shows price rises accelerating again.

But, generally, the barometer for these rates looks to be indicating Set Fair, perhaps for weeks to come — or even longer. However, don’t expect the sorts of tumbles that would see them reach early-2021-style lows.

As long as general interest rates remain high, mortgage rates probably can’t fall all that far. Unless, of course, we see more and bigger banks getting into big trouble.

In any event, my personal rate lock recommendations remain:

• 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

This time last week, I was talking about mountains of uncertainty. Markets were uncertain of how big the Federal Reserve’s Wednesday rate hike would be and what its outlook for future interest rates would look like. And everyone was on edge over the potential for new banking crises.

The Fed

Wednesday’s Fed events were pretty extraordinary. It picked the smaller option for that day’s rate hike.

But the thing I wasn’t expecting was the extent of its turnaround on future hikes. Instead of the bigger-and-faster-than-expected-increases narrative of only a couple of weeks earlier, the Fed switched to pussycat mode. And it’s now forecasting only one more modest rise through the rest of 2023.

Recent banking crises

Of course, the Fed’s change of tune was largely down to the recent banking crises. As The Financial Times put it yesterday in a headline, “Financial turmoil could end up doing rate-setters’ job for them.”

What the FT meant was that banking crises could drive inflation lower without the Fed and other central banks lifting a finger. That’s because those crises are likely to make it tougher for consumers and businesses to get approved for loans.

And that should lower demand. As everyone knows, lower demand — with a constant supply — equals lower prices.

Given that the Fed was only hiking rates in order to rein in rising prices (i.e. inflation), it’s hoping its work is almost over. Let’s hope it’s right.

Future banking crises?

Everyone gets on edge during a banking crisis: depositors, stockholders, regulators, governments and markets. And that makes sense.

There’s an ever-present risk of contagion. In other words, banks have financial relationships with each other and one getting into trouble can infect others. The ultimate fear is a domino effect, where one bank toppling causes another to fall, setting off a long chain reaction.

But we seem a long way from that situation. True, we saw Germany’s Deutsche Bank under stress late this week. But there seems to be little basis for the panic, as The Guardian’s financial editor explained yesterday (no paywall).

Deutsche Bank has been extensively reorganized since its troubles five years ago. And it made $6.13 billion last year in profits. Contrast that with Credit Suisse, which lost $7.94 billion that year.

Meanwhile, banks and regulators have successfully fought all the banking fires so far this month (and year and decade). Silicon Valley Bank, Signature Bank and Credit Suisse are no longer threats. And only First Republic Bank remains a live story.

That’s not to say more troubled banks won’t cause problems. But it’s growing less likely by the day. And, if any do, that’s likely to be good for mortgage rates.

Economic reports next week

The big story next week is likely to be Friday’s personal consumption expenditures (PCE) price index on Friday. That’s an important measure of inflation and the one the Fed relies on most.

Besides that, most of the economic reports next week concern real estate. And, ironically, those rarely affect mortgage rates much.

At least one top Fed official has a speaking engagement each day next week, and those sometimes sway markets. However, we received a definitive take on the Fed’s current policy position on Wednesday. So, it’s unlikely this latest crop of speeches will reveal much that’s new.

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 — U.S. consumer confidence for March. Plus January’s home price indexes from Case-Shiller and the Federal Housing Administration
• Wednesday — February pending home sales
• Thursday — Second revision of gross domestic product for the last quarter of 2022. And initial jobless claims for the week ending Mar. 25
• Friday — February PCE report. Plus the consumer sentiment index for March.

Watch out for Friday’s PCE inflation report!

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

Mortgage interest rates forecast for next week

I’m hoping mortgage rates might drift gently lower next week. Or, at least, barely move. There could be bigger falls if a further banking crisis emerges. Or there may be some sort of rise if next Friday’s inflation report shows prices climbing much faster than expected.

Please note that this and similar predictions are based on probabilities, not certainties. Nobody can ever be sure what the future will bring.

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.