Mortgage and refinance rates today, April 23, and rate forecast for next week

Today’s mortgage and refinance rates

Average mortgage rates just inched higher yesterday. But they rose appreciably over the whole week. And Freddie Mac reported on Thursday that these rates have now increased for seven consecutive weeks.

I suspect mortgage rates might rise next week, too. However, markets are still dealing with a great deal of turbulence and uncertainty. So you should be skeptical of any prediction.

Current mortgage and refinance rates

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Should you lock a mortgage rate today?

I’d lock my rate on the first morning when mortgage rates look likely to rise. Recently, that’s been most mornings.

According to some measures, mortgage rates are currently at their highest since 2009. They began to rise gently last August. Then we had a slightly steeper rise starting in mid-December 2021. And they’ve shot up since early March.

You’re right that this pace of change can’t last forever. And various things (see below) might slow down mortgage rates’ climb or even reverse it. But I suspect we’ll see continuing rises for the next few months at least — perhaps for longer.

So, 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 personal tolerance for risk help guide you.

What’s moving current mortgage rates

Mortgage rates have been rising through fear in markets of two things:

1. Inflation — Now at a 40-year high
2. The Federal Reserve’s plans to tackle inflation — These could push mortgage rates yet higher. And they may create a recession, if misjudged and overly aggressive

As of midnight tonight, we shouldn’t hear another peep out of the Fed until a report and news conference on May 4. So markets will have little to go on as they guess just how aggressive the central bank’s plans will be.

Of course, that won’t stop them speculating. And, if markets’ fevered imaginations expect an even tougher response to inflation than they currently think, mortgage rates could rise quickly between now and then. But, if they think they’ve been too pessimistic and moderate their expectations, those rates might hold steady or fall.

Of course, there are only 11 days between today and May 4. So, we’re looking at a relatively brief period.

Goldilocks day

Think of May 4 as Goldilocks day. If the Fed’s anti-inflation plans are more aggressive than expected, then that would be “too hot” for markets’ taste, and mortgage rates might rise. If those plans are less aggressive (too cold), mortgage rates might fall. But if the plans come in as expected, that would be just right. And those rates might barely budge.

I wish I could tell you how Goldilocks day will work out. Judging from Fed officials’ rhetoric, we can expect some seriously aggressive actions. But the people who make up markets have read the same reports I have. And will be hoping that they’ve accurately anticipated (and priced in) what’s to come.

So, we all just have to wait for May 4 to find out what the Fed actually says.

We already know some of it. Fed officials have widely trailed a 0.5% hike in its federal funds rate. Everyone’s expecting it and has priced it in. So that should change little in markets.

What we still don’t know is how quickly the Fed will run down its $2.73-trillion holdings of mortgage-backed securities (MBSs). Those are the type of bond that largely determines mortgage rates. And the speed at which the central bank runs down those holdings will be critical to where those rates go next.

We have much less — and less certain — guidance about the Fed’s plans for those. Some figures have been bandied about. But the main message has been to wait for May 4.

Again, markets will have done their best to anticipate what the Fed might do about MBSs. But the unveiling of the final plan could push mortgage rates either way as investors move to adjust their expectations to reality.

Economic reports next week

One thing that might influence the Fed between now and its next meeting is the official Personal Consumption Expenditures (PCE) Price Index, which is due out next Friday. It’s not only the central bank’s preferred inflation measure, but it’s also the one closest to its May 4 meeting.

If inflation’s running hotter than expected, the Fed might rein in inflation more aggressively than it currently plans. So, markets will eye that figure closely, too.

The other big report next week is the first reading of gross domestic product (GDP) for the first quarter of this year (Q1/22). Nobody’s expecting growth to have been as strong as in the previous quarter. But how much weaker will it be?

The potentially most important reports, below, are set in bold. The others are unlikely to move markets much unless they contain shockingly good or bad data.

• Tuesday — March durable goods orders. Plus February home price indexes from S&P Case-Shiller and the Federal Housing Finance Agency. Also April consumer confidence index
• Wednesday — March pending home sales
• Thursday — Q1/22 gross domestic product. Plus weekly new claims for unemployment insurance to April 23
• Friday — March Personal Consumption Expenditures (PCE) Price Index. Plus April consumer sentiment index

Look out for Thursday and Friday.

Mortgage interest rates forecast for next week

Nothing’s changed since last week. And I will continue to predict that mortgage rates might rise next week. But don’t take these weekly suggestions too seriously. Amid the current volatility, my success rate has more to do with luck than judgment.

Mortgage and refinance rates usually move in tandem. And the scrapping of the adverse market refinance fee last year has largely eliminated a gap that had grown between the two.

Meanwhile, another recent regulatory change has likely made mortgages for investment properties and vacation homes more accessible and less costly.

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.

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 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 2021

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.