Mortgage and refinance rates today, Apr. 22, and rate forecast for next week

Today’s mortgage and refinance rates

Average mortgage rates inched lower yesterday. But they rose over the last seven days. Still, Thursday and Friday’s falls were encouraging.

Three economic reports later next week could move mortgage rates appreciably. And, since I don’t know what those reports will say, I’m afraid I can’t predict where these rates will head over the coming seven days.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Nothing’s changed since last week. A recession still looks increasingly likely. And markets (and mortgage rates) could soon begin to move in anticipation of it.

That’s my hope and expectation: that mortgage rates will begin to move lower soon. But plenty could come along that upsets my analysis.

Still, for now, my personal rate lock recommendations remain:

• 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.

What’s moving current mortgage rates

Recessions and mortgage rates

What do we want? A recession! When do we want it? Now!

Clearly, few of us really want a recession. They can inflict real pain.

But there’s a strong correlation between recessions and lower mortgage rates. So, purely with our rates hats on, a recession would be helpful.

Is a recession coming?

It’s hard to open a financial publication or visit a financial website without soon seeing the ‘R’ word. Here’s a sample of headlines from The Wall Street Journal (paywall) over the last 10 days:

• Stocks Fall as Recession Fears Grow (Apr. 21)
• U.S. Stocks Fall as Recession Concerns Rise (Apr. 20)
• Drop in Transportation Stocks Foreshadows Weakening Economy (Apr. 21)
• Short Sellers Are Positioning for a Recession, S&P Says (Apr. 18)
• Fed Sees Higher Likelihood of Recession (Apr. 12)

Most business pages would yield a similar crop of recession-related headlines. A recent one in The New York Times (paywall) was “Why We’re Probably Headed for a Recession.”

And, in his weekly e-newsletter yesterday, Comerica Bank Chief Economist Bill Adams took up the theme: “The earliest economic releases for April mostly point to a downshift in growth momentum,” he wrote.

What is a recession?

In most of the world, a recession is defined as a period of two or more consecutive quarters during which gross domestic product (GDP) growth is negative. In other words, six or more months when the economy shrinks.

However, America uses a different definition. We can have two consecutive quarters of negative growth and still not be in recession.

According to the White House: “The National Bureau of Economic Research (NBER) Business Cycle Dating Committee — the official recession scorekeeper — defines a recession as ‘a significant decline in economic activity that is spread across the economy and that lasts more than a few months.’“

And it’s up to that committee to determine whether or not we’re in a recession, regardless of GDP data.

Recession and mortgage rates: a timetable

We’re due to get the latest GDP data, for the first quarter of this year, next Thursday, Apr. 27. And economists are forecasting the headline number at 1.8% growth.

That’s down on the growth rate of 2.6% in the last quarter of 2022. But it’s still a positive number, so we’re still a way off recession territory.

However, we don’t have to be in a recession for fear of a future one to affect mortgage rates. Markets pride themselves on anticipating economic trends and events and acting well in advance of them.

So, I’m hoping we’ll soon see investors trading ahead on the basis of an expected recession, which should drag mortgage rates lower. Indeed, the slightly lower rates we’ve seen over the last couple of days could be the start of that process.

However, that “could” is doing some heavy lifting. And a couple of days is way too short a period on which to base any forecasts.

Still, at least you can now see why I’ve continued to hope for lower mortgage rates in spite of their recent rises.

Inflation

There’s another silvery lining to be found in a recession, besides lower mortgage rates. And that’s that it tends to drive out inflationary pressures.

We’ve already seen price rises slow considerably over the last few months. And we’re due data next Friday, Apr. 28, that will confirm or deny the continuation of that trend.

That day, we’ll see the personal consumption expenditures (PCE) price index for March, which is the Federal Reserve’s favorite measure of inflation. And the employment cost index for the first quarter of this year will be released at the same time.

The former complements the consumer price index and measures broadly similar price rises. The latter shows the extent to which inflation has become embedded in the labor market.

Right now, economists polled by MarketWatch are forecasting that both reports will show little change since the previous reporting period. If that’s what the reports actually show, mortgage rates might barely move.

But if they show inflation rising, mortgage rates are likely to go up, too. And, if they show it falling, those rates might drop.

Economic reports next week

I covered the major reports due next week in the previous sections.

Those reports that are potentially important for mortgage rates are shown in bold in the following list. The others rarely move those rates far unless they contain shockingly good or bad data.

• Tuesday — April consumer confidence index. And March new home sales. Plus February home price indexes from S&P Case-Shiller and the Federal Housing Finance Agency
• Wednesday — March durable goods orders
• Thursday — First quarter GDP (first reading). Plus initial jobless claims for the week ending April 22
• Friday — March PCE price index. And first quarter employment cost index. Plus April consumer sentiment index

There are heavyweight reports on Thursday and Friday.

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

Mortgage interest rates forecast for next week

With crucial and unpredictable economic reports next Thursday and Friday, I can’t forecast what will happen to mortgage rates over the coming seven days.

But, further ahead, I’m still optimistic that mortgage rates could fall back appreciably.

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.