Time to Wake Up to the New Mortgage Rate Reality | July 8, 2021

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

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Over the past week, mortgage rates have remained largely unchanged for refinancing, while those for home purchase are also mostly unchanged. 

Homeowners and buyers should take advantage of reduced home mortgage rates, knowing that the Federal reserve is not raising rates and investors are not pushing rates higher.

Current mortgage refinance rates for July 8, 2021

Today, mortgage refinancing rates remained unchanged except for the 20-year fixed rate, which rose despite an otherwise placid real estate market. 

This week’s mortgage refinance rates are largely unchanged from yesterday.

• 30-year fixed refinance rates: 2.990%, unchanged overnight 
• 20-year fixed refinance rates: 2.750%, up ↑ 2.500%
• 15-year fixed refinance rates: 2.250%, unchanged overnight
• 10-year fixed refinance rates: 2.250%, unchanged overnight

Rates last updated on July 8, 2021. These rates are based on the assumptions shown here. Actual rates may vary.

Make sure to shop around and compare rates with multiple lenders if you decide to refinance. You can do this easily with Credible’s free online tool and see prequalified rates in only three minutes.

Current mortgage rates for July 8, 2021

Like today’s refinance rates, current mortgage rates are largely unchanged since yesterday except for a slight drop in the 10-year fixed purchase rate.

• 30-year fixed mortgage rates: 2.875%, unchanged from yesterday 
• 20-year fixed mortgage rates: 2.500%, unchanged after yesterday
• 15-year fixed mortgage rates: 2.125%, also unchanged since yesterday
• 10-year fixed mortgage rates: 2.000%, down from yesterday

Rates last updated on July 8, 2021. These rates are based on the assumptions shown here. Actual rates may vary.           

Investors and homeowners took advantage of low mortgage rates earlier in the year, causing a massive real estate boom. That boom may be cooling in anticipation of Fed rate hikes. Hence, certain mortgage rates will dip or spike from time to time.

How to qualify for a lower mortgage rate

Many factors influence the mortgage rate and terms a lender may offer you. The factors lenders will consider include:

• Your credit scores and credit history
• How much you want to borrow
• The repayment term you’re seeking
• How much downpayment you have
• Your income
• Other factors

Fortunately, you can take steps to make yourself as appealing as possible to potential lenders —  and score the best mortgage rate available to you: 

1. Pay off debt. Reducing other debts before you apply for a mortgage can help improve your credit score by reducing your debt-to-income ratio. It can also help ensure you’ll have enough disposable income to be able to make your monthly mortgage payment. 
2. Go for a shorter term.  Ten-year and 15-year mortgages tend to have the lowest interest rates. That’s because the shorter term means less risk for lenders. If you’re able to swing a higher monthly payment, a shorter term could mean a lower interest rate and big interest savings for you over the life of the loan. 
3. Put as much down as you can. Lenders —  and many sellers —  like to see a down payment of at least 20% (more if you’re able). A bigger down payment could help you get a lower rate, set you apart from other buyers, and help you avoid costly private mortgage insurance (PMI).
4. Check out first-time homebuyer programs. There are federal and state programs that help first-timers with down payments, closing costs, lower interest and more. Some even offer grants.
5. Maintain your income . Try to  avoid changing or quitting jobs before you apply for a mortgage. 
6. Consider mortgage points. Mortgage points are a closing cost that you pay to the lender up front in exchange for a lower interest rate. While the points may feel like a big hit at first, a lower interest rate could add up to big interest savings over the life of a mortgage. 

Mortgage interest rates forecast

Mortgage rates are closely tied to the federal funds rate —  the interest rate banks charge each other when borrowing or lending their excess reserves overnight. The Federal Reserve sets a target rate for banks to follow. 

When the economy isn’t great, the Fed may lower rates, and mortgage rates usually fall too, since it becomes cheaper for lenders to make loans. When the economy improves, the Fed may raise rates to try to contain inflation —  and mortgage rates could climb.

While no one can exactly forecast how mortgage rates will behave, that federal funds rate and inflation are among several key indicators that experts can consider when making predictions. Researchers  at the Mortgage Bankers Association, Freddie Mac and Fannie Mae all predict —  to varying degrees —  that  mortgage rates will rise throughout 2021. 

But keep in mind that average rates are no guarantee of the rate you might qualify for when applying for a mortgage. Your credit score, down payment amount, income and many other factors will also come into play.

For your next home purchase, consider using Credible. You can check current mortgage rates from all of our partner lenders without affecting your credit score. Our free online tool is safe and simple to use — and it only takes a few minutes to prequalify.

What causes mortgage rates to fluctuate?

• Inflation - causes the value of the dollar to constantly diminish. In the current economy, inflation has not played a role in a jump in home prices as buyers are paying almost anything to get into new homes for a low annual percentage rate.
• Economic conditions - current economic conditions indicate that the economy will remain flat until the end of the summer, keeping rates down. Rates are likely to rise again with a recovery in the early fall. 
• The Federal Reserve - the Fed has yet to raise interest rates, waiting for an economic recovery as mentioned above. 
• Origination cost - origination fees have been on an upward trend for some time, and the rising cost of these fees helps keep rates low.
• Your own financial/credit history - home buyers are encouraged to keep their debt to income ratio as low as possible, pay off debt to raise credit scores and save for a down payment prior to shopping for homes. A 20% down payment offers better rates than 3.5%. In this real estate market, buyers are getting multiple offers and often go with the buyer who can close the fastest with the highest assurance of mortgage approval.
• The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.