Mortgage rates change constantly.
Know how to track mortgage rates so that you know when to purchase or refinance.
How can I track changing mortgage rates?
Because mortgage rates change similarly to the stock market, there are no websites that claim to predict exact changes in the market. However, there are a few indicators you can use to predict how mortgage rates will change in the future.
What are mortgage rates based on?
When a lender closes on a mortgage, that mortgage is often packaged with other mortgages and sold as a bond. These bonds are sold to an investor (often, and investment bank or government-sponsored enterprise). The interest on a mortgage is effectively paid out as the yield on a mortgage-backed security bond. Because of this, mortgage backed securities and other indicators like U.S. Treasury bonds can be used to predict how mortgage rates will change.
Where should I look for current mortgage rates?
Mortgage News Daily aggregates a number of rates which should give you accurate mortgage rates, as long as enter the details of the mortgage you plan to purchase as well as your credit score. Some sites will guarantee a better mortgage rate without knowing all of your details, so it does help to talk to specific lenders.
How can I track current and predict future mortgage rates?
The easiest way that you can track the movement of mortgage rates is by following the US Treasury 10 year bond yield. The yield is the interest rate that the government pays when someone buys a 10 year treasury bond and the 10 year bond yield is considered a benchmark rate for other financial instruments like mortgages. The yield (or rate) that the 10 year bond is paying at any given time can easily be found on websites like CNBC.com or Bloomberg.com. Since the 10 year bond yield is considered a forward looking market gauge, when it moves up or down you will usually see mortgage rates quickly follow in the same direction.
How else can I watch the market?
This page at Mortgage News Daily is a free page that shows how the mortgage market is moving. As a borrower, it is smart to get a sense of how the market is performing, how your credit score affects your rate, and how much you are paying in fees, which can be analyzed with your APR. After you have your bearings, defer to a lender, as they have access to mortgage interest rate tracking tools that are often paid-subscriptions, and help them get a more advanced sense of when you should lock in a rate.
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Other things to consider when it comes to mortgage rates
Whether your mortgage interest rate is variable or fixed, it will come with a percentage interest rate to be paid. While this is clearly useful, you should also pay attention the the Annual Percentage Rate (APR) you will be paying. The APR is a more accurate measure of how much you will be paying, as it measures the interest rate, closing costs, and possibly discount points. These costs can add significantly to your payments.
Think About Closing Time
Rates can change constantly, and it may not be smart to lock in your rate based on a bet on the state of the market. As a borrower, you can lock in a loan after the initial loan approval. Many borrowers choose not to lock in the loan until they have found a home to purchase. Depending on the rate lock period, they need the time to close on the house. If you lock in a rate for 30 days and the house takes 35 days to close, you may end up paying extension fees just to reserve the same rate. Longer rate locks may also cost mortgage points.
Talk to your lender and ask questions about when you should close, or lock in a rate.
Ensure the Loan You Need is Available
If you are looking for something other than a conventional loan, be sure that the lenders you’re considering offer the loan you need. With so many loan options available, clue into which loan is best suited for your needs, and research how much experience your lender has handling the type of loan you want. Homesite Mortgage offers conventional, FHA, VA, USDA, and jumbo home loans.
Each lender has different values—choose the lender that delivers on their promises.
At Homesite Mortgage, we know that not every lender keeps your best interests in mind. That’s why we’re committed to prioritizing your needs in every decision through the home mortgage process—including offering you the best available interest rates. That’s the Homesite Mortgage promise.
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