Mortgage Rates Today, Oct. 22, & Rate Forecast For Next Week

Today’s mortgage and refinance rates

Average mortgage rates fell yesterday. But that rounded off another terrible week for those rates, which rose appreciably over the seven days.

Unfortunately, I’m still unable to provide weekly forecasts for mortgage rates. Markets are simply too volatile and unpredictable for me even to hazard a guess.

Current mortgage and refinance rates

Program Mortgage Rate APR* Change
Conventional 30 year fixed 7.299% 7.331% -0.03%
Conventional 15 year fixed 6.808% 6.847% +0.28%
Conventional 20 year fixed 7.311% 7.372% +0.21%
Conventional 10 year fixed 6.77% 6.893% +0.83%
30 year fixed FHA 7.255% 8.029% -0.08%
15 year fixed FHA 7.125% 7.401% Unchanged
30 year fixed VA 6.726% 6.96% -0.36%
15 year fixed VA 6.125% 6.483% Unchanged
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions here.

Should you lock a mortgage rate today?

Don’t lock on a day when mortgage rates look set to fall. My recommendations (below) are intended to give longer-term suggestions about the overall direction of those rates. So, they don’t change daily to reflect fleeting sentiments in volatile markets.

Read on for why yesterday might have brought a glimmer of hope for long-term mortgage rates. But that hope’s unlikely to be realized before 2023.

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 own tolerance for risk help guide you.

What’s moving current mortgage rates

Yesterday, I wrote, “Unfortunately, I’m pessimistic about our seeing worthwhile falls in [mortgage] rates over the next six months.” Is my face covered in egg already?

Well, maybe. It’s true I doubt mortgage rates will fall in a sustained way for as long as the Federal Reserve is hiking its federal funds rate*. And I believed it would probably continue those hikes at least through the first quarter of 2023 because … well, because that’s what members of its rate-setting committee predicted at their last meeting, on Sep. 21.

*The federal funds rate is directly connected to most interest rates, including those for adjustable-rate mortgages (ARMs). When it rises so do almost all rates. However, it only indirectly influences rates on new, fixed-rate mortgages (FRMs). Still, that influence has recently been considerable.

Divided Fed

So far, so good. But, yesterday afternoon, The Wall Street Journal (paywall) suggested the Fed would probably hike the federal funds rate by another 75 basis points (0.75%) on Nov. 2. However, it would, also at that meeting, “debate whether and how to signal plans to approve a smaller increase in December.” The Journal article continued:

Some officials have begun signaling their desire both to slow down the pace of increases soon and to stop raising rates early next year to see how their moves this year are slowing the economy.

As that “some officials” implies, it’s as yet unclear how many members of the rate-setting committee (the Federal Open Market Committee or FOMC) are on board with this approach. Its main proponents so far have been Fed Gov. Christopher Waller and San Francisco Fed President Mary Daly.

However, Fed Chair Jerome Powell has consistently advocated a hawkish (aggressive) approach to rate hikes, vowing to stay the course until inflation could be seen to be falling over some months. And some other committee member are likely to support that view. We’re a long way off reaching that standard.

We’ll have to wait until Nov. 2 to discover who has the upper hand. But that Journal article brought joy to markets. And it may well have driven at least some of yesterday’s unexpected fall in mortgage rates.

Persuasive arguments on both sides

You can see where Mr. Waller and Ms. Daly are coming from. The Fed’s rate hikes are intended to slow the economy by raising unemployment and reducing spending among consumers and businesses. However, those are “lagging indicators,” meaning it takes a while for them to show up in economic reports.

So, the Waller-Daly camp fears the rate hikes the Fed has already implemented will soon show up in employment and other data. And they believe further rate increases will cause unnecessary economic pain.

Mr. Powell’s camp sees real pain as a price worth paying for taming inflation. And, in a late-August speech, the Fed chair spelled that out: “These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”

Personally, I’d back Jerome Powell as the likely winner in any showdown. He’s the Fed chief and a hugely influential figure. But we can’t be sure how things will play out on Nov. 2 — or Dec. 15 when the succeeding hike (if any) — is due. So, for now, we just have to wait and see.

Unfortunately, this public debate has created more uncertainty in markets. And that probably means more volatility for mortgage rates as investors wager on who will emerge as victor in this Fed war.

Economic reports next week

There are some very important economic reports due out next week. The two vying for top spot are the first reading of gross domestic product (GDP) for the third quarter of this year and the personal consumption expenditures (PCE) report for September.

GDP will tell us how the economy is holding up in the face of the Fed’s rate hikes. And the PCE report includes the Fed’s favorite measure of inflation. Yep, it’s still all about the Fed.

The important reports next week are shown below in bold. Others are unlikely to move mortgage rates unless they contain shockingly good or bad data.

  • Monday — October purchasing managers’ indexes (PMIs) for the manufacturing and services sectors from S&P
  • Tuesday — October consumer confidence index. Plus August home price indexes from S&P Case-Shiller and the Federal Housing Finance Agency (FHFA)
  • Wednesday — September new home sales
  • Thursday — Real gross domestic product in Q3/22. Plus weekly new claims for unemployment insurance to Oct. 22. Also, September orders for durable goods and core capital equipment
  • Friday — Personal consumption expenditures report for September. Plus Q3 employment cost index. Also, October consumer sentiment index.

It’s a pretty crowded week. But the most important reports are due on Thursday and Friday.

Mortgage interest rates forecast for next week

I’ll resume normal service as soon as I can. But, for now, your guess is as good as mine when it comes to next week’s mortgage rate movements.

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 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.

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.